On 18 July 2018, the Supreme Court overruled a Court of Appeal decision to increase a wife’s periodical payments after she mismanaged her finances following her and husband’s divorce.
The background to Mills v Mills and spousal maintenance
Maria and Graham Mills were married for approximately 15 years and had one child together. Mr Mills was a self-employed surveyor. Mrs Mills worked initially as a self-employed beauty therapist, before turning to estate agency after the parties’ son was born, and then working briefly in Mr Mills’ surveying business before the couple split.
The parties separated in 2000, divorced in 2002 and managed to reach a financial settlement by consent, which included the sale of the family home.
It was agreed that Mrs Mills would receive £230,000 in settlement of her capital claims against Mr Mills with the expectation that she would purchase suitable, mortgage-free, accommodation for herself and the parties’ son as she had been suffering from ill-health which made it difficult for her to work. In addition, Mr Mills agreed to pay Mrs Mills spousal maintenance at a rate of £13,200 per year, or £1,100 per month.
Despite what had been anticipated Mrs Mills did manage to secure a mortgage and duly purchased a more expensive property for £345,000. Over the next seven years, Mrs Mills made a number of unwise property investments, until in 2009, she was forced to sell her final property and move into rented accommodation.
By 2015, Mrs Mills had no capital form her original divorce settlement left and had debts of around £42,000. She also had a shortfall between her then income needs and the level of spousal maintenance provided by Mr Mills of £4,092 per year.
Mr Mills’ circumstances had also changed in that he had remarried and had another child.
Mr Mills made an application to the Court to end his spousal maintenance payments to Mrs Mills, on the basis that the original agreement no longer reflected the up to date positions of his or Mrs Mills’ lives.
In response, Mrs Mills made her own application to increase the level of payments to her.
The decision about spousal maintenance
At first instance, the Judge held that Mrs Mills’ current financial needs, in particular her need to pay rent, had been increased by the choices she had made and it would be unfair for Mr Mills if he had to increase his payments to her, on account of this. The Judge, therefore declined to vary the payments upwards or downwards.
The result meant that Mr Mills was still obliged to continue paying the same level of spousal maintenance, which equated to 60% of Mrs Mills’ rental costs.
Mrs Mills appealed against this decision and was successful in the Court of Appeal, who ordered Mr Mills to increase the level of spousal maintenance to cover the shortfall in Mrs Mills’ income needs.
Mr Mills then appealed this decision and the Supreme Court was unanimous in concluding that the Judge at first instance had been entitled to decline to vary the original order, so as to require Mr Mills to pay all of Mrs Mills’ rental costs.
The reason had been made clear – Mrs Mills’ own unwise decisions in relation to her capital had increased her basic needs by requiring her to rent and it was unfair to expect Mr Mills to meet these increased needs in full. Mrs Mills had already had a clean break which provided for her housing. To give her more of his income, Mr Mills would effectively be paying for her housing again.
The impact on spousal maintenance
What can we learn from the Supreme Court’s ruling?
- Courts are demonstrating a greater expectation on the non/lower-earning spouse to take responsibility for their finances after divorce, to be financially prudent and to stand on their own two feet in the long-term;
- The decision not to increase spousal maintenance payments follows recent judicial thinking that divorce should not constitute “a meal ticket for life” and appears to shut the door on spouses coming back for housing claims in the future when they have already been factored into a capital award;
- However, it is still worth noting that the decision did not bring about the end of the original spousal maintenance order and Mr Mills is still effectively paying a ‘joint lives maintenance order’ with no end in sight;
- Financially weaker parties may still, therefore, be relieved to see that the notion of maintenance for life has survived its latest test, albeit the decision appears not to have widened its scope;
- It is still only a complete financial clean break, in cases where that it possible, that will prevent protracted litigation and future applications for variations of spousal maintenance payments.