Mackrell Turner Garrett

National Lawyers, Internationally

 

Finance spousal maintenance

 
 
 
White Collar Crime
 

Entitlement

England and Wales has historically been a forum of choice with the level and duration of spousal maintenance in mind that a non-earning wife or husband can obtain from their ex-spouse. However, the ground is changing. In the recent case of SS v NS [2014] EWHC 4183 (Fam) Mostyn J took the opportunity to summarise the principles to be applied to claims for spousal maintenance:

  • A spousal maintenance award is properly made where the evidence shows that choices made during the marriage have generated hard future needs on the part of the claimant. Here the duration of the marriage and the presence of the children are pivotal factors.
  • An award should only be made by reference to needs, save in the most exceptional cases where it can be said that he sharing or compensation principle applies.
  • Where the needs in question are not causally connected to the marriage, the award should be aimed at alleviating significant hardship.
  • 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 should be considered unless the payee would be unable to adjust without undue hardship to the ending of payments. A degree of (not undue) hardship in making the transition to independence is acceptable.
  • If the 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 quantum of spousal maintenance but is not decisive. That standard should be carefully weighed against the desired objective of eventual independence.
  • The essential task of the judge is not merely to examine the individual items in the claimant’s income budget but also to stand back and to look at the global total and to ask if it represents a fair proportion of the respondent’s available income that should go to the support of the claimant.
  • Where the respondent’s income comprises a base salary and a discretionary bonus the claimant’s award may be equivalently partitioned, with needs of strict necessity being met from the base salary and additional, discretionary, items being met from the bonus on a capped percentage basis.
  • There is no criterion of exceptionality on an application to extend a term order. On such an application an examination should be made of whether the implicit premise of the original order of the ability of the payee to achieve independence had been impossible to achieve and, if so, why.
  • On an application to discharge a joint lives order an examination should be made of the original assumption that it was just too difficult to predict eventual independence.
  • If the choice between an extendable and a non-extendable term is finely balanced the decision should normally be in favour of the economically weaker party.

The overall thrust of all these principles is that spousal maintenance orders can no longer be taken for granted and consideration will be given to the absolute minimum term. It is not enough for the receiving party to say that they are going to experience a drop in their standard of living compared to that which they enjoyed in the marriage. Mostyn J considers this acceptable and almost seems to suggest that this should act as a motivator towards independence.

Term of Maintenance

Under s31 of the Matrimonial Causes Act the court has the power to vary term income orders. In the recent case of Murphy v Murphy [2014] EWHC 2263 (Fam) the judge was asked to consider a variation including an automatic step down in maintenance and thereafter a cessation in maintenance altogether when the children finished secondary education.

The way the husband presented his case was a problem, amounting to no more than “very vague generalisations” and comments that “she [wife] could get a job”. One wonders whether, if he had been able to put flesh on those bones, he may have made more progress with his application.

This case was also slightly unusual in that the original order allowed for a reduction in maintenance as and when the wife started to earn. The husband’s maintenance was to reduce by 50p in the £1 against the wife’s net earnings after her first year of employment. It had been considered that the wife would get a job. In all the circumstances including the parties’ two young twins the judge felt he could not be sure of the wife’s financial position once the children had finished school or for the rest of her life. The joint lives order continued.

In Chiva v Chiva [2014] EWCA Civ 1558 the first instance judge met the wife’s housing need from capital and made an order for periodical payments of £700 per month for two years. Both parties were professionals (wife was an actuary). The wife had previously earned very well but since the birth of their child (now aged three) she had only been working seven days per month (and still making £32,300 a year). This perhaps made the judge’s exercise far easier – they simply said that after two years she would be able to work another three days per month and this would cover the gap left by the periodical payments (based on her daily rate given her earnings). There was no bar to the term being extended so, if this proved impossible, she could apply to extend.

The case in this area that has attracted the most media attention recently is the case of Wright v Wright [2015] EWCA Civ 201. The husband was earning around £150,000 per annum and an order was made in 2008 saying that he would pay £33,200 per annum on a joint lives basis plus child maintenance and school fees. The wife had previously worked and it was clearly in the mind of the first instance judge that the wife should be considering a return to the work place:

“there is a general expectation in these courts that once a child is in year two (aged six or seven), most mothers can consider part time work consistent with their obligation to their children. By Sept 09/10, the wife should be able to work. She will be 46 or 47 years old. I do not anticipate her having a significant earning capacity nor would it be reasonable to expect her to muck out stables for minimum wage, however, she should make some financial contribution”

The husband duly applied to vary the award at a later date (presumably concerned that the wife had not taken on board the judge’s comments with regard to getting work). The appeal judge ordered that the spousal maintenance should reduce gradually over six years at the conclusion of which the payments would cease. The judge was very critical of the wife’s failure to take appropriate steps to get work. The Court of Appeal supported the decision.

There is a private member’s bill presented by Baroness Deech which is currently before the House of Lords. At its core is the aim of limiting spousal maintenance. Of course, this is not law yet but it is certainly indicative of a growing feeling that during any case, consideration must be given to the possible earning capacity of both parties and it will no longer be sufficient to say ”I have the kids, so you pay….”.