On 18 July 2018 the Supreme Court handed down judgment in the case of Mills v Mills. Very few Family law financial cases get to the Supreme Court and Family lawyers were hoping for significant guidance in the difficult area of applications to vary spousal maintenance orders.
Graham and Maria Mills divorced in 2002 after a 15 year marriage. They were a family who kept their heads above water financially, but could not be described as wealthy. They settled their claims by agreement and a consent order was made with Maria Mills receiving the lion’s share of the capital as she was going to be the primary carer of their son. She received £230,000 which was over 80% of the capital and a spousal maintenance order in her favour of £13,200. The maintenance order was open-ended and would come to an end on her remarriage, the death of either of them or a further order of the court.
Open-ended maintenance orders were the norm in 2002. The current judicial approach leans towards term maintenance orders and if the case had been negotiated today a maintenance order coming to an end when their son finished his education would be far more likely.
Maria Mills was working part-time as a beauty therapist and Graham Mills was a surveyor with his own small business.
It was expected that with her lump sum, Maria Mills would purchase a home for herself and their son. During the 2002 proceedings Graham Mills had argued that this would enable her to buy a property mortgage free, whereas she argued for a housing requirement of £350,000. However, she was free to do whatever she wished with the money when she received it and she bought a property for £345,000.
Over the next 7 years Maria Mills then bought and sold a series of properties, each time increasing the mortgage. From the court judgment it seems likely that on each purchase she released capital which she then used to supplement her income and the spousal maintenance she was receiving and living beyond her means. By 2009 she had to move into rented accommodation.
Mills v Mills initial judgement
In 2015 Maria Mills issued an application to increase the maintenance payments as combined with her own income, she was no longer able to afford to support herself. Graham Mills applied to terminate the maintenance payments on payment of a capital sum of £26,000, or alternatively to fix the term of the maintenance payments and/or downward vary what he was paying. By now their son was an adult, Graham Mills had remarried and had a child by his new marriage. His net annual income was £55,000.
The judge hearing the Mills v Mills case described Maria Mills evidence as “not fully satisfactory”. Her net annual income was only £18,500 and she put her needs at a little under £36,000 of which £10,200 was for rent. After deduction of her earnings her needs were a little over £17,300 per annum and the maintenance she was receiving was short by just over £4,000.
The initial outcome
The judge declined to vary the maintenance order either upwards or downwards. He made a series of findings including that the lump sum Maria Mills received in 2002 would have enabled her to buy a home free of mortgage, however it had been reasonable for her to be ambitious and buy the house that she had. After that, she had not managed her finances wisely committing to borrowings which were too high, but said it would be wrong to describe her approach as profligate or wanton. Ultimately, her needs had been augmented by reason of the choices she had made. The judge found that it would not be fair that the maintenance payments should include “a full contribution to her housing costs”. The judge concluded that Maria Mills would have to adjust her expenditure to live within her means.
Graham Mills could afford to pay the maintenance payments both at the current level and also the additional sum of £4,000 if it had been ordered.
On a maintenance variation the court is required to consider fixing a term “to enable the party in his favour the order was made to adjust without undue hardship to the termination of those payments”. The judge did not feel he could impose a term.
Why they both appealed
Both Graham and Maria Mills sought permission to appeal to the Court of Appeal, but permission was only granted to Maria. The Court of Appeal allowed the appeal citing lack of reasons in the first instance judgment. The trial judge had given his reasons although they were concise. This is no surprise; busy judges with heavy workloads usually give fairly short judgments.
Graham Mills appealed to the Supreme Court. Permission was given to appeal, but only on a single ground: whether, in light of the fact that provision had already been made for the Maria Mills’ housing needs in the capital settlement, the Court of Appeal had been entitled to interfere with the judge’s initial determination not to make full allowance for her need to pay rent.
The Supreme Court allowed the appeal saying that the judge was clearly entitled to decline to vary the maintenance order which would require Graham Mills to pay all of his former wife’s rent. It reinstated the order at first instance.
So what can we take from the Mills v Mills judgment. On the one hand, very little. The court has a very wide discretion when dealing with a maintenance variation and the judge’s order was within the ambit of the court’s reasonable discretion.
However, reading between the lines of the judgment, it is clear that spousal maintenance cannot be viewed as an insurance policy. If a recipient of maintenance makes poor financial decisions, they cannot expect their former spouse to be forced to bail them out with an increased maintenance order.
On a maintenance variation application, a judge is likely to follow current judicial trends rather than the approach of the court at the time a maintenance order was made. If possible, the court will look to impose a fixed term so that the maintenance order comes to an end and is unlikely to be sympathetic to applications to increase maintenance unless there are compelling reasons.
If you need expert advice on maintenance orders or family relationship issues more widely, please contact Philip in our Family & Divorce team. Alternatively, you can email email@example.com or call 020 7631 4141.