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Husband wins Supreme Court appeal against order to pay all wife’s rental costs

First instance judge was entitled to decline to vary periodical payments order

In Mills v Mills [2018] UKSC 38 the Supreme Court has allowed a husband's appeal against an order, secured in the Court of Appeal, which increased the level of his periodical payments so as to cover her shortfall between existing periodical payments and her current needs.

The Appellant and Respondent are former husband and wife. They divorced in 2002 after a marriage of approximately fifteen years, and the financial issues in the divorce were resolved by way of a consent order. Under the terms of that order the wife received £230,000 in settlement of her capital claims against the husband, and it was also agreed that the husband would make periodical payments to her at an annual rate of £13,200.

It was reasonably anticipated by the husband that the wife would use the £230,000 to purchase a suitable home for herself and their son without a mortgage, as the wife had been suffering from ill health which made it difficult for her to work. In the event, however, the wife did manage to take out a mortgage, and she duly purchased a more expensive home for £345,000. Between 2002 and 2009 the wife sold and purchased a series of different properties, and with each purchase the amount which she borrowed increased. In addition, she did not necessarily reinvest all of the sale proceeds from one property into the next and seemingly spent the balance, with the result that the amount of capital she had decreased over time. Eventually, in 2009 the wife sold her final property and began to rent accommodation. By April 2015, when the first-instance judge heard the case, the wife had no capital, and she had debts of around £42,000.

The hearing before the judge was to determine two cross-applications made under s.31(1) of the Matrimonial Causes Act 1973. The husband had applied for the discharge or downwards variation of the order for periodical payments, whereas the wife had applied for the order for periodical payments to be varied upwards. In determining the applications, the judge noted that there was a shortfall of £4,092 per annum between the wife's current needs and, when coupled with her own earnings, the existing level of the periodical payments. However, he also held that, although the wife's actions had not been profligate, she had not managed her finances wisely and her current financial needs, in particular her need to pay rent, had been increased by the choices which she had made. Consequently, the judge considered that it would be unfair to the husband if he had to make a full contribution to the wife's rental costs. The judge therefore declined to vary the order for periodical payments either upwards or downwards. This meant that the husband would continue to contribute to around 60% of the wife's rental costs, and the wife would have to adjust her expenditure to accommodate the shortfall.

The wife appealed against this decision to the Court of Appeal, and was successful. The Court of Appeal considered that the judge had not given sufficient reasons why all of the wife's basic needs should not be met by the periodical payments from the husband, and increased the level of periodical payments to cover her shortfall, i.e. to £17,292. The husband now appeals against this decision to the Supreme Court.

The Supreme Court unanimously allows the appeal, concluding that the judge was entitled to decline to vary the order for periodical payments so as to require the husband to pay all of the wife's rental costs. Lord Wilson gives the judgment with which Lady Hale, Lord Carnwath, Lord Hughes and Lord Hodge agree.

The husband was granted permission to appeal to the Supreme Court only on a single ground – whether, in light of the fact that provision had already been made for the wife's housing needs in the capital settlement, the Court of Appeal was entitled to interfere with the judge's decision not to increase the periodical payments so as to cover all of the wife's current rental costs [32].

The Court of Appeal had erred in saying that the judge had given no reason for declining to increase the order for periodical payments – the judge had given a clear reason, namely that the wife's unwise decisions in relation to her capital had increased her basic needs by requiring her to pay rent, and that it was consequently unfair to expect the husband to meet these increased needs in full [33].

The Court of Appeal should have considered the impact of the original capital payment on the wife's current need to pay rent, and this involved a consideration of three earlier Court of Appeal authorities: Pearce v Pearce [2003] EWCA Civ 1054, North v North [2007] EWCA Civ 760, and Yates v Yates [2012] EWCA Civ 532 [34-38]. These cases were correctly decided and in light of this, the judge was entitled, although not obliged, to decline to require the husband to fund payment of the rent in full. This respects the wide discretion conferred upon the court under s. 31(1) and (7) of the Matrimonial Causes Act 1973 in determining an application for variation of an order for periodical payments. Moreover, a court would need to give very good reasons for requiring a spouse to fund payment of the other spouse's rent in the circumstances of this case. A spouse may well be obliged to make provision for the other spouse, but an obligation to duplicate that provision in situations such as this is improbable [40].

Supreme Court Press Summary

Comments from the parties' solicitors

Beverley Morris
, partner at Lodders Solicitors, acting for Mr Mills, said:

"The decision has been hailed as a victory for Mr Mills, and whilst it is right to say we have won in the Supreme Court, the problem remains that Mr Mills is still paying a 'Joint Lives Maintenance Order' with no end in sight.

"Within the element of maintenance, he is paying towards her rent, when the original award gave her a housing fund. It is therefore difficult to see it as a successful outcome when so many questions remain unanswered. The Family Court is tasked with finding a fair solution. There remains judicial uncertainty as to what is fair - the Court of Appeal gave one view which the Supreme Court has reversed.

"At the heart of this case, however, is the issue of financial prudence and financial responsibility. Mrs Mills proved an unreliable witness with her evidence being described as 'not fully satisfactory' but, despite that, Mr Mills has an ongoing obligation to maintain her.

"So, what now? It is time for us to contemplate this outcome and take time out to consider what would be the right outcome for this family going forward."

Joanne Westcott, partner at Osbornes who represented Maria Mills, said:

"The Supreme Court were asked to determine a very narrow point about whether the court was entitled to increase spousal maintenance payments to meet rent when provision for the wife's housing needs had already been met in the original order.

"Today's decision does not bring about the end of spousal maintenance for the wife, unattractively described as a 'meal ticket for life,' far from it.  The original spousal maintenance provision of £1,100 per month from 2002 remains intact. What the Supreme Court decided was that the £341 increase provided for by the Court of Appeal was wrong because it took into account an element of her rent.

"There has been a shift towards achieving a clean break and imposing a term on spousal maintenance but this does not apply in this case. This shift is closer to the Scottish system which provides maintenance payments for up to three years following a divorce. 

"Where Maria and Graham go from here is entirely dependent on them, either of them could ask to capitalise the maintenance payments. This means husband pay to the wife a lump sum to effectively buy a clean break and end monthly payments.  Before running off to court to make any application they should certainly try and reach an agreement if possible.

"Maria is disappointed and feeling bruised after almost four years of litigation to end up exactly where she was at the start."

Other comments

Hazel Wright, partner in the family department at Lincoln's Inn firm Hunters Solicitors, commented:

"All maintenance cases ultimately have to answer one basic question: 'how long and how much?' Today's Supreme Court ruling regarding the divorce maintenance settlement of Mr and Mrs Mills cuts to the heart of this question.

"Mr and Mrs Mills lived well during their 13 year marriage, largely due to his financial contribution as chairman of the surveying company Technics Group. On divorce, they negotiated a settlement by which she took most of the liquid capital, to provide her with housing and a lump sum. Once these has been provided, the only remaining link between them was the sharing of his income with her. There was no limit on how long this should last and nothing to stop either of them asking for a variation of that provision.

"Mrs Mills clearly wanted to go on living well after the divorce by relying on that income. Like many people, she decided to increase her own capital by buying and selling homes, trading up each time and eventually could not afford her mortgage. She has spent the rest of the capital from the divorce, so she found herself renting a home.

"Conversely, Mr Mills wanted simply to move on from the marriage and the divorce. He asked the court to break the income link. So he applied to court on the basis that Mrs Mills had been irresponsible over money and should be able to meet her own housing needs. He also wanted to buy out her remaining income dependence on him.

"Today, the Supreme Court agreed that it is time for Mrs Mills to be independent and to meet her increased housing costs herself.

"The court has ruled that it would be unfair to Mr Mills to be saddled with an obligation to keep up the maintenance payments to Mrs Mills at the level she wanted, £1,441 per month rather than the £1,100 per month he was paying. She had already had a clean break which provided for her housing. To give more of his income, Mr Mills would effectively be paying for her housing again."

Stacey Nevin, associate in the family & divorce law team at Kingsley Napley, noted:

"Today's conclusion of the Mills v Mills saga will be disappointing to those who wanted to see the end of lifetime maintenance obligations. However it was a victory for Mr Mills as the Supreme Court found favour with his argument that he should not be required to meet the costs of Mrs Mills' housing needs.  In 2002, Mrs Mills had received liquid capital to allow her to purchase a mortgage free property, but a series of poor financial decisions saw her housing fund squandered elsewhere, leaving her in debt. She sought to increase her maintenance to support her housing needs now she was renting.  Crucially, today's Supreme Court decision means that Mr Mills does not need to bear the consequences of her poor financial decisions 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.  Financially weaker parties will be relieved to see that the notion of maintenance for life has survived its latest test, albeit today's decision has not widened its scope."

For the judgment, click here.

18/7/18