Amy Scollan examines divorce settlements in a recent Court of Appeal case in Family Law Week

  • March 23, 2017
  • By Hunters Law

Maintenance, Needs and Fairness

Amy Scollan, Associate, Hunters Solicitors considers the issue of “fairness” in relation to maintenance and variations of maintenance.

According to Lord Scarman in Minton v Minton [1979] AC 593, 608

‘An object of the modern law is to encourage [the parties] to put the past behind them and to begin a new life which is not overshadowed by the relationship which has broken down.’

If this assertion were put to Mr Mills, following judgment in his recent appeal, one can’t help but wonder whether he would be likely to think either that Lord Scarman’s statement is an inaccurate reflection of modern family law or that the Court of Appeal has failed him.

Mills v Mills
It has been reported in the media that last month, the Court of Appeal ordered Mr Mills to increase his monthly maintenance payments to his former wife (whom he divorced over 15 years ago) from £1,100 per month to £1,441 per month to meet her basic needs.  It appears that the Court also confirmed that his maintenance obligation is to continue on a joint lives basis.

It should be emphasised that the judgment has not yet been published but it can be ascertained from the variety of press reports that the reasons Mrs Mills has an income need which she cannot meet herself are:

i. She has lost the lump sum payment of £230,000 which she was awarded and which represented virtually all of the parties’ liquid capital at the time of their divorce.  Sir Ernest Ryder, who gave the leading judgment, is reported to have stated that Mrs Mills had unwisely invested in a series of properties, each time moving upmarket, with the consequence that she is now without any of the capital she was awarded in 2002.   Mrs Mills is now living in a rented home.  Mrs. Mills’ barrister pointed out that Maria’s approach to the utilisation of her lump sum was not ‘profligate or wanton.’

ii. The Court accepted that Mrs Mills’ ability to work had been hindered by ill health, and her barrister also linked her credit card debt to her health.

This decision has received a great deal of attention in the press, and arguably this is a decision which does not seem to sit well with the standard of fairness held by the person in the street.  It is submitted that it does not seem fair that a man who has been paying maintenance for 15 years, which is longer than he was married, is being made effectively to insure against his former wife’s poor use of capital following their divorce.

However, this is not the first time, nor will it be the last time, that a maintenance decision defies what John Bull considers to be fair.  For instance, in the 1989 case of Fisher v Fisher [1989] 1 FLR 423,   the parties separated in 1978, and decree nisi was pronounced in 1979.  In 1981, the wife had a child by another man from whom she could not secure financial support, and the wife successfully applied to the court to increase her periodical payments from her former husband to cover her increased need.  The husband appealed, arguing that it was inequitable that a former wife who cannot work because she has to look after an illegitimate child should be maintained at the expense of her former husband.    The Court of Appeal found that there was no point of principle to discuss and that the court is obliged to have regard to all the circumstances of the case.  The wife’s new child was therefore a proper consideration to be taken into account.

It has been noted by Mr Justice Mostyn in SS v NS (Spousal Maintenance) [2014] EWHC 4183 (Fam) that there has been not much discussion in the case law of ‘the moral or ethical question of why after the dissolution of a marriage the law permits the imposition on a party of the obligation to pay spousal maintenance potentially until the death of the payee (even, in the case of a secured periodical payments order, after the death of the payer).’

The law in Scotland does not permit such an imposition of lifetime maintenance.  Section 9(1)(d) of Family Law (Scotland) Act 1985 provides:

“….a party who has been dependent to a substantial decree on the financial support of the other party should be awarded such financial provision as is reasonable to enable him to adjust over a period of not more than three years from the date of the decree of divorce, to the loss of the support on divorce.”

Lord Hope of Craighead explained in Miller v Miller McFarlane v McFarlane [2006] All ER (D) 343 (May) (‘Miller’) at paragraph 117 that the principle of maintenance being payable for three years ‘is intended to enable the court to cushion the blow of divorce by providing funds to enable a spouse to find employment or retrain or to adjust to a lower standard of living.’

If this is Scots law, presumably it resembles what a Scot considers to be morally and ethically fair maintenance provision following a divorce. With English law allowing for lifetime maintenance – do we really have such a different sense of fairness to our friends across the border?

Lord Nicholls in Miller considered the question of what constitutes “fairness” and concluded that “[f]airness is an elusive concept.  It is an instinctive response to a given set of facts.  Ultimately it is grounded in social and moral values.  These values, or attitudes, can be stated.  But they cannot be justified, or refuted, by any objective process of logical reasoning.  Moreover, they change from one generation to the next.  It is not surprising therefore that ……. there can be different views on the requirements of fairness in any particular case.

Therefore, the delivery of a fair maintenance award in respect of quantum and term is a matter of judgment and discretion which we have to have faith in our judges to deliver, and the statutory framework gives them a wide berth.

Statutory guidance
Section 23(1)(a) of the Matrimonial Causes Act 1973 gives the court a very wide and general power to make:

“….an order that either party to the marriage shall make to the other such periodical payments, for such term, as may be specified in the order.”

However, the Act does not give any specific guidance as to how the court should exercise this power beyond section 25(1) – first consideration should be given to the welfare of the children of the family and the court is directed to specifically have regard to the matters set out in section 25(2)(a)-(h).

Section 25A(2) Matrimonial Causes Act provides:

“Where the court decides in such a case to make periodical payments… order in favour of a party to the marriage, the court shall in particular consider whether it would be appropriate to require those payments to be made…only for such term as would in the opinion of the court be sufficient to enable the party in whose favour the order is made to adjust without undue hardship to the termination of his or her financial dependence on the other party.”

This is simply a duty on the court to consider whether to order a clean break and it maintains the courts’ wide discretion to decide when it is appropriate.

Baroness Hale in Miller at paragraph 133 explained that “[s]ection 25A is a powerful encouragement towards securing the court’s objective by way of lump sum and capital adjustment (which now includes pension sharing) rather than by continuing periodical payments.  This is good practical sense.  Periodical payments are a continuing source of stress for both parties.  They are also insecure…. It is also the logical consequence of the retreat from the principle of the life-long obligation.  Independent finances and self-sufficiency are the aims.  Nevertheless, section 25A does not tell us what the outcome of the exercise required by section 25 should be.  It is mainly directly at how that outcome should be put into effect.”

Mr Justice Mostyn in SS v NS (Spousal Maintenance) recounted a history of the legislative framework of spousal maintenance since secular divorce was first permitted in 1857, and concluded that Parliament has always given the decision as to the quantum and term of spousal to the unfettered discretion of individual judges.

Development of income need
Historically, the courts’ approach to the provision of periodical payments can be seen to have been judicially developed within a very wide statutory context. Section 1 of the Matrimonial Causes Act 1866 limited a wife’s maintenance entitled to payments for maintenance and support.  It provided:

“In every such case it shall be lawful for the court to make an order on the husband for payment to the wife during their joint lives of such monthly or weekly sums for her maintenance and support as the court may think reasonable.”

The Matrimonial Causes Act 1965 empowered the courts to make:

“An order requiring the husband to pay to the wife during their joint lives such monthly or weekly sum for her maintenance as the court thinks reasonable.”

Thorpe LJ in McFarlane v McFarlane; Parlour v Parlour [2004] EWCA Civ 872  held the view that this provision did not extend beyond the court making maintenance provision which meets the wife’s need (for income and housing) albeit until the case of White v Whitethe courts referred to this need as ‘reasonable requirements.’

In Cornick No.3 [2001] 2 FLR 1240 Charles J described the effect of White v White as:

“……..White v White [2000] 2 FLR 981 is clear authority ……… for the following points, namely that (a) the court should not rely on the judicial concept of ‘reasonable requirements’ as a determinative or limiting factor in cases when a payor has, or acquires, an ability to pay more than the payee’s financial needs even when they are interpreted generously and called ‘reasonable requirements’, and (b) the court should exercise its discretion by applying the words of the statute.”

Baroness Hale in Miller acknowledged that White v White was ‘a great leap forward’ as to how a court should reallocate capital and income to achieve fairness.  The task of reallocating the resources to the marriage was assisted that same year by the introduction of pension sharing.  However, Baroness Hale acknowledged that the Matrimonial Causes Act 1973 [2006] All ER (D) 343 (May) ‘still leaves us without much help towards what the court should be trying to achieve.’   Having acknowledged this, Baroness Hale went on to state that ‘the court’s ultimate objective is to give each party an equal start on the road to independent living’ and articulated three principles to help the court to meet such an objective: need (generously interpreted), compensation and sharing.

As stated earlier in this article, as much as the courts have tried to articulate the exercise of its discretion in deciding the question of the quantum and the appropriate term of maintenance, it is still absolutely a matter for the judges involved. Arguably, they will be exercising their own sense of fairness.

In Miller, Baroness Hale explained that ‘the most common rationale’ for the reallocation of resources in the marriage ‘is that the relationship has generated needs which it is right that the other party should meet.’  In other words, relationship generated need. Mrs McFarlane was a wife who gave up a job in a well-paying profession to care for a child of the family, and then at the time of divorce such a profession was no longer open to her.  Her need for income was clearly relationship generated because she was unable to earn enough to fund her own monthly needs.  However, the labeling of need this way creates by default a category of non-relationship generated need.

My observation is that when a person is made to pay maintenance to a former spouse to meet a non-relationship generated need, this is where there is a collision between the courts sense of fairness and the public’s.  Mrs Mills’ need for an increase in maintenance appears to have been caused by her own choice in relation to how she spent her divorce settlement and her ill health, which are both unrelated to her former husband.  Surely, there should be some connection between the reason for the need and the marriage?  Mr Justice Mostyn in SS v NS asserts that if there is not, the court “is looking at the issue in a macro-economic utilitarian way and deciding that in such circumstances it is better that the ex-husband picks up the cost of the ex-wife’s support rather than the hard-pressed taxpayer.”  I agree.

On a final note, I am interested to read how the court approached the analysis of Mrs Mills’ bad investment of her 2002 lump sum.  Although her barrister said that the court found her spending not to be wanton, it is submitted that wanton spending is not the threshold.  In Miller [2006] All ER (D) 343 (May), Lord Hope stated that claimants on a variation application “are expected to manage their financial affairs sensibly and responsibly” and that he agreed with the Court of Appeal that any failure to do so, was relevant on a variation application.

This article was originally published in Family Law Week and can be accessed here

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