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The Supreme Court has granted a former husband’s appeal in the case of Mills v Mills. This case focussed on cross applications to vary a spousal maintenance order made in 2002 when Mr and Mrs Mills divorced.
Mr and Mrs had been married for around 15 years and following their divorce they were able to reach an agreement about the financial issues which were incorporated into a Consent Order (an agreement between the parties which was then approved by the court).
The agreement, amongst other things, provided for Mrs Mills to receive a lump sum of £230,000 and maintenance of £13,200 per annum from Mr Mills. The understanding was that Mrs Mills would use the £230,000 to purchase a home for herself (and their son) and that she would be able to do so without the need for a mortgage. In fact, despite her having been ill and unable to work, Mrs Mills was able to take out a mortgage and with this, she purchased a more expensive home for £345,000. Between 2002 and 2009 Mrs Mills sold and purchased a number of different properties and with each purchase the amount she borrowed increased. It appears she also spent some of the sale proceeds instead of reinvesting them all from one property into the next. Over time her capital decreased. In 2009 Mrs Mills sold her last property and she then began to rent. By April 2015 she had no capital left and debts of about £42,000.
In 2014, Mr Mills applied to the court to discharge or decrease the spousal maintenance payments he had been making. His case was that Mrs Mills had (a) lost the capital she had retained in 2002 through ‘gross financial mismanagement’ and (b) was in a position to work more in order to increase her income. At the same time Mrs Mills made an application to increase the spousal maintenance on the basis that she was unable to meet her basic needs/outgoings.
In determining the applications, the trial judge noted that there was a shortfall of £4,092 per year between Mrs Mills? current needs and, when added to her own earnings, the level of the spousal maintenance that Mrs Mills was paying. However, he also found as a fact that, although Mrs Mills’s actions had not been reckless, she had not managed her finances astutely and her current financial needs, in particular her need to pay rent, had been increased by the choices she had made. The Judge therefore considered that it would be unfair to Mr Mills if he had to pay her rental costs. The judge therefore declined to change the original order/agreement and Mr Mills was ordered to continue to pay spousal maintenance of £13,200 per year.
Mrs Mills then appealed that decision and won. The Court of Appeal considered that the trial judge had not given sufficient reasons why all of her basic needs should not be met and increased her maintenance to £17,292 per year. Mr Mills then appealed.
The Court of Appeal decision certainly caused a stir among family lawyers. You will have read from my earlier spousal maintenance blogs that the current trend had seemed to indicate that parties should become financially independent from each other much sooner than perhaps they previously would have done, and ‘joint lives’ maintenance orders are quite rare nowadays.
Although the Supreme Court had a fairly limited decision to make, the bigger question for anyone receiving or paying spousal maintenance is likely to be ‘does a person’s need for rent justify another bite at the cherry when the need has already been addressed by the court?. The court has been clear in that the circumstances will need to be very good to justify rent being paid where housing has already been provided for.
The Family Court’s discretion is wide and the point decided by the Supreme Court was a narrow one. What it does highlight is that only a total clean break will avoid future applications for an increase, decrease, or capitalisation post divorce of spousal maintenance orders. In the Mills case there was not sufficient reason to justify additional support.
For the time being Mr and Mrs Mills will be going back to the original order.