Mills v Mills UKSC 2018
When couples get divorced it is often the wife who has a maintenance order setting out how much the husband has to pay on a monthly basis. These used to last for the lifetime of the couple but over recent months our Judges are preferring a shorter period of time for the payment of maintenance. We have recently had a judgment from the Supreme Court which clarifies this area for divorcing couples.
The brief facts of the case are that Mr and Mrs Mills got divorced in 2002 after 15 years of marriage. They reached a financial settlement by agreement. Mrs Mills got most of the capital, she also got spousal maintenance.
Two things are important in this case. Firstly, a capital settlement is a one-off distribution of the capital monies of the couple i.e. the net proceeds of sale of a house or savings in the bank in order to cover their needs.
The second is that any maintenance order made can be varied. Therefore, if the circumstances of one or other spouse changes they can apply back to the court to increase or decrease the amount paid. As family lawyers we call this an application to vary. The court has a very wide discretion on this type of application.
In 2015 Mrs Mills made an application to increase her maintenance and Mr Mills responded with his own application to discharge the maintenance order or to vary the maintenance he was paying his ex-wife downwards.
According to Mr Mills, his ex-wife had received sufficient money in the financial settlement in 2002 of £230,000 to purchase a house free of mortgage. This was not however agreed by Mrs Mills. She bought a house with a large mortgage. Mrs Mills said she needed £350,000 to rehouse. Mrs Mills between 2002-2009 bought and sold her houses and each time she did so she also took money out of the property, so she was investing less and borrowing more, therefore spending the capital.
In the end Mrs Mills couldn’t afford to own a property and by 2009 looked to rent instead.
Mrs Mills then turned to Mr Mills for further financial support. She had no house and was in debt. She couldn’t claim any more capital because that is a one-off claim, she was however able to vary the maintenance to seek an increase to cover the rental payments, and so she did.
The first Judge to hear the case ruled that the initial capital sum would have enabled her to buy a house and that the maintenance payments should not be changed. Mrs Mills appealed to the court of appeal.
The court of appeal went in her favour and made an order that the maintenance should be increased. It is useful to know that this was not a big money case. Mr Mills ran a company and had income of approximately £50,000 per annum, he was originally paying maintenance of £13,200 per annum. This was increased to £17,292 per annum.
Mr Mills perhaps unsurprisingly appealed. His appeal did not run entirely smoothly, he of course had made an application to discharge the maintenance order or to vary the maintenance downwards. When you appeal a decision of the court, you need the permission (leave) of the court. Mr Mills did secure permission but it was very limited.
The Supreme court is made up of five Judges, and on this occasion included Lady Hale the President of the Family Division. They needed to answer the question given at paragraph 1 of their Judgement which was:-
“ In circumstances in which, at the time of the divorce a spouse, say a wife, is accorded capital which enables her to purchase a house but later she exhausts the capital by entry into a series of unwise transactions and so develops a need to pay rent, is the court entitled to decline to increase the order for the husband to make periodical payments to her so as to fund payment of all (or perhaps even any) of her rent even if he could afford to do so?”
The Supreme court confirmed in their Judgement given on 18th July 2018 that Mrs Mills could not have her cake and eat it so to speak! She could not receive money for a house, buy a house then take money out of the house, increase the mortgage and then ask her ex-husband to pay her maintenance when it all went wrong.
The Supreme court ruled that the maintenance should stay the same and so Mr Mills was successful in preventing the maintenance being increased. It should be remembered however that Mr Mills is still paying £13,200 per annum.
The actual wording was:-
“ A spouse may well have an obligation to make provision for the other but an obligation to duplicate it in such circumstances is most improbable.”
What would have happened to Mr Mills if the Judge had not ruled the original lump sum was sufficient to buy a house? Therefore, if you are going to have a maintenance order, it may be worth considering whether there should be a note in the consent order, providing the detail of what the capital is for and the related cost of the house purchase.