- April 21, 2016
- 0 comments
Maintenance: is a life time maintenance order a thing of the past?
How much v How long
When I first see the spouse who is likely to be paying maintenance their first question is how much will I have to pay? However, they quickly learn that an equally important question is for how long?
In England and Wales, many prospective payers of maintenance are horrified to know that it is still possible under English law for there to be a lifetime maintenance order in favour of a former spouse. In Scotland spousal maintenance is limited to a period of 3 years. It is possible for a limited duration order to be made in England. These are known as “term maintenance orders”. Such terms can be extendable or not (extendable term maintenance orders or term maintenance orders with Section 28 Matrimonial Causes Act 1973 bar).
In 1984, the Matrimonial Causes Act 1973 was amended to provide that the court must consider a clean break (i.e. an ending of spousal maintenance) between the parties both when they seek an initial order for financial remedy and on applications to vary maintenance. Prior to this spousal maintenance could only be dismissed with the consent of the potential recipient. The 1984 changes introduced an obligation on the courts to consider whether it was appropriate for financial obligations to be terminated on or after the decree.
The courts in England and Wales pride themselves on tailoring orders to fit particular cases. This means that it is often difficult for lawyers to advise clients with certainty how the court will approach a claim for maintenance.
Following the 1984 changes, there was a flurry of cases where the courts took a more robust view and were prepared to bring an end to spousal maintenance or at least make nominal maintenance orders. (Where a token order is made say 5p per annum just to keep the right to claim maintenance alive).
However, all this changed firstly with the decision in White v White 2000 2 FLR 981 which heralded the start of a more generous approach to the economically weaker party. In the White case, one of very few cases at the time to go to the House of Lords (the highest court in the land at the time, it was held that any financial award has to be checked against the “yardstick of equality”. In White case which concerned a farming couple who owned several farms, Mrs. White exited the marriage with approximately 42% of the family assets. This was on the basis that there was a clean break. This case led to wives being treated more generously.
In the case of Miller v Miller 2006 1FLR 1186 where the husband was a high earner and the wife had given up her opportunity of pursuing her profession as a high flying solicitor where it was said that her income could have been equivalent to her husband’s, a very generous award was made. W received periodical payments of maintenance in the sum of £250,000 per annum for life. The award was not limited to the wife’s needs. This case went to the House of Lords and the order replaced a term order for the same figure that had been made by the Court of Appeal.
The case of Miller was notable in that it introduced the concept of sharing. Baroness Hale said:
“the main family asset is the husband’s very substantial earning power generated over a lengthy marriage in which the couple deliberately chose that the wife should devote herself to the home and the husband to work and have a career. The wife is undoubtedly entitled to generous income provision for herself and for the sake of their children… she is also entitled to share in a very large surplus on the principles both of sharing the fruits of the matrimonial partnership and of compensation for the comparable position that she might have been in had she not compromised her own career”.
Following the case of Miller, it was felt that applicants could advance a claim for compensation for any economic disadvantage suffered as a result of the marriage.
The compensation principle was not applied in many cases. It was specifically rejected in the case of VB v JP 2008 1FLR 742. The judge, in that case, said “the partnership ends and in ordinary circumstances the wife has no right or expectation of continuing economic parity (“sharing”) unless and to the extent that consideration of her needs or, or compensation for relationship generated disadvantage so require”.
In the case of L v L 2011 EWHC the wife did obtain a joint lives award for spousal maintenance and had in the original divorce settlement received the transfer of a farm which she ran as a hobby.
On appeal maintenance was reduced as the trial judge had failed to assess the ability of the husband to make maintenance payments for life and had failed to explain why she had made a joint lives order. The joint lives order was reduced to a term maintenance order to give W the opportunity to make the family farm produce an income. If she was not able to do this then she would have to sell the farm and re-house herself and the use excess capital to produce an income in another way.
In SS v NS 2014 EWHC 4143 the wife sought half the family capital and maintenance of £60,000 per annum index linked for 27 years. She also sought 40% of H’s net bonus. She was prepared to agree to the share of the bonus being capped at £70,000 per annum and that the cost of school fees could be deducted from her share of the bonus.
H earned £170,000 per annum net. He proposed W should receive £24,000 per annum for 12 months, £18,000 per annum for the next four years and £12,000 per annum for a further six years. At that time, H wanted a clean break. Additionally, he would give W 20% of a net cash bonus for three years limited to £18,000.
W was awarded £30,000 per annum index linked for 11 years but with a right to extend the term. 20% of H’s bonus was capped at £26,500 per annum for a period of six years on a clean break. The capital of 3.29m was divided so that W received approximately 50% of the capital. The judge in the case Mostyn J took the opportunity to set out clear principles for determining maintenance. The most important of these are:-
- An award should only be made by reference to needs save in a most exceptional case where sharing or compensation may apply.
- In every case, the court must consider a termination of spousal maintenance with a transition to independence as soon as is just and reasonable. A term order should be considered unless the recipient would be unable to adjust without undue hardship to the ending of maintenance.
- If a choice between an extendable term and a joint lives order is finely balanced the statutory steer should militate in favour of the former.
- The marital standard of living is relevant to the amount of maintenance but is not decisive.
- The task of the judge is not just to examine the budget but to stand back and look at the global total to ask if it represents a fair proportion of the respondent’s available income that should support the claimant.
The case law emphasising the clean break objective has strengthened in its emphasis. Case law has strengthened not just in favour of the clean break objective, see also Matthews v Matthews 2014 2FLR 1259 but also in favour of term maintenance and for maintenance generally being based on relationship generated needs.