AML: HMRC flexes enforcement muscle to the tune of £7.8 million
Today saw the conclusion of the long running Mills v Mills saga, with the Supreme Court handing down judgment in the husband’s appeal. The Supreme Court had been asked to consider whether the court was entitled to decline to increase Mrs Mills’ maintenance payments to fund payment of all or some of her rent when her housing needs had been catered for in the original divorce proceedings.
Mr and Mrs Mills separated in 2000 after 13 years of marriage, divorcing in 2002. At the time of their divorce, it was agreed that their now adult son would continue to make his home with Mrs Mills. The parties reached agreement on the financial claims between them, with Mrs Mills taking a total of £230,000 of the net equity of the family home (approximately 91%) and receiving maintenance payments of £13,200 per year. The husband kept the parties’ shares in their surveying companies and £23,000 of cash from the sale of the family home. Mrs Mills’ maintenance award did not include provision for rent, as it was anticipated she would use her capital award to purchase a mortgage free property.
The intention at the time was to enable Mrs Mills to purchase a property using the £230,000 she received. It was accepted by both that she had no ability to raise a mortgage. Nevertheless, later in 2002 Mrs Mills purchased a house for £345,000, raising the balance on mortgage.
What then followed was a series of property transactions where Mrs Mills “committed herself to borrowings which were too high”. These are neatly summarised in the Supreme Court’s judgment today, but ultimately the result was that by the time Mr Mills applied to court to stop maintenance payments in 2015, Mrs Mills was living in rental accommodation, had no capital and debts totalling £42,000.
Mrs Mills cross applied, seeking an increase to her maintenance award, as she now had rental costs which had not been factored into the original award. At first instance, neither party were successful and the order remained at the rate of £13,200 per year. In the Court of Appeal, Mrs Mills successfully argued to increase her maintenance to £17,292 per year, which included her shortfall in her rental payments.
Whilst Mr Mills was not permitted to appeal the decision that he should continue paying maintenance, he was given permission to appeal the decision to increase the maintenance award to cover the shortfall. Today, the Supreme Court allowed his appeal and restored the maintenance to the 2002 amount.
Mrs Mills’ housing needs had been catered for within the capital award given to her in 2002. Her needs as they are today were by reason of choices she had made over the last 16 years. An increase to the maintenance award would see Mr Mills paying for Mrs Mills’ housing needs twice; first in 2002 when she took the lion’s share of the liquid capital and again, with the increase in maintenance to cover her rental costs. Effectively, Mr Mills was being asked to bear the consequences of his ex-wife’s poor financial decisions over the last 16 years.
Whilst these cases remain fact specific and today’s decision does not prevent such claims being made due to the court’s wide discretion, the Supreme Court has set the bar high. Spouses seeking to increase their maintenance award to meet a need that was already catered for with the capital award face a tough test; “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.” Even though it was accepted that Mr Mills could afford to pay at the higher level and that Mrs Mills had a greater need, it was not considered fair that he should meet this greater need. The question of fairness will play a key role in future cases looking at this point.
What paying parties may find disappointing is that Mr Mills remains obliged to pay his former wife maintenance, even at the original level. Mr Mills has now been paying maintenance for 16 years, three years longer than the parties were married and living together. The question of how long maintenance should be paid remains unanswered and fact specific. However, today’s decision is likely to be seen as further evidence for the need to press for financial independence between divorced couples and it is a judgment that will find favour with those pushing for an end to lifelong maintenance payments. Whilst Mrs Mills is not required to move to full financial independence from her former husband, she must now meet her increased housing costs herself and cannot look to her former husband to meet her needs generated by the choices she has made; responsibility for these choices rests solely with her.
For those with the benefit of a life term maintenance order, careful financial planning is essential; in respect of maintenance, life does not mean life and at any point a change in circumstances or an application to vary could result in a real financial predicament. Securing your financial future without the fear of it being taken away offers valuable peace of mind.
Whether you are in receipt of or paying maintenance, you may find our FAQs helpful - Practical tips on varying spousal maintenance – does life mean life?
If you have questions about any of the issues raised in this blog, please contact Stacey Nevin or a member of our family team. Our team includes accredited mediators, who will be able to assist with mediation or other alternative arrangements to court proceedings.
Skip to content Home About Us Insights Services Contact Accessibility