Business Plan 2020-21: FCA remains vigilant to potential misconduct
After several cases suggesting a sea of change and an end to "meal tickets for life", the recent case of Mills v Mills may have stemmed the tide.
Whilst the written judgment has yet to be made available, according to press summaries, Mr Mills was ordered to continue paying maintenance to Mrs Mills for their joint lives even though she had received almost all of the liquid capital in the marriage in 2002. It was reported that Mrs Mills is now in debt, apparently due to poor property investments. Mr Mills' application to have maintenance terminated, fifteen years after the marriage, not only failed but the Court of Appeal increased the monthly amount payable to Mrs Mills after concluding that she was unable to meet her basic needs on the current level of maintenance he was paying her.
Maintenance orders for life can hold uncertainties for both the payer and the recipient. If you are the payer, what does maintenance for life really mean? If you are the recipient, could your maintenance be terminated or reduced in the future? Either party could be subject to a variation order in the future. Whilst we cannot dissect the decision in Mills v Mills without the judgment, in this blog we set out key practical tips that anyone facing a variation application (whether the payer or the recipient) may find helpful to consider.
A joint lives maintenance order is an order for maintenance to remain payable until the death of either party, the remarriage of the recipient or further order of the court. Sometimes, the court can order (or the parties can agree) that such payments should terminate upon the recipient cohabiting for a specified period of time.
Yes, maintenance can be ordered or agreed for a term of years. Whether or not it can be extended will depend on the order. If the order contains what solicitors refer to as a section 28(1A) bar, then the term cannot be extended past the period specified in the order. Whether a bar is appropriate will depend on the facts of the case.
Either party can apply to vary, but no application should be made without considering the prospects of success. Equally, the prospects of successfully defending an application should be considered carefully. The unsuccessful party could be on the hook for their ex-spouse’s costs at the end of the case.
The court will consider all the circumstances of the case when considering a variation application. This is likely to include the parties' needs, their financial resources, age, physical disability, standard of living and earning capacity. Importantly, the court must consider whether the person receiving maintenance payments can adjust to financial independence without undue financial hardship.
Assuming capital claims were dismissed in the original order, the court will only consider capital as a resource from which to meet income needs. If the payer has capital, the court will consider if the maintenance claim can be capitalised. Instead of continuing on-going maintenance payments, the court may order a lump sum to be paid, upon which all claims against income will be terminated. If the recipient of maintenance has sufficient capital that could meet income needs, then this can be considered in any variation, although not to the extent that the court would expect an individual to liquidise all of their assets in order to meet living costs.
If you are the payer, you could be susceptible to an application to enforce payment of the maintenance under the order, including any arrears, if you breach the court order by stopping payments before there is a formal variation.
If you are the recipient of maintenance and the payer stops making the maintenance payments, you will need to consider the benefits of starting enforcement proceedings. Whilst court should be considered a last resort, undue delay in issuing enforcement proceedings could limit your claim. You can only seek arrears that are 12 months old or less. If the arrears are more than 12 months old, you will need the permission of the court to bring proceedings to recover these. If you are close to the 12 month point, but you are engaging with your ex-partner, you may wish to issue a protective application to “stop the clock”.
Where there is on-going maintenance without a time bar, the payer may always be susceptible to a variation application seeking a higher level of maintenance, or extending the term that maintenance is payable for in the absence of a time bar. In the event that your circumstances are going to change, for example retirement is on the horizon, acting with time to spare may help aid negotiations by alleviating the immediate pressure. You cannot crystal ball gaze, but if it is clear that your financial position is going to change, taking early advice and engaging with the other side in order to allow time for sensible discussions may help. During the course of any variation application, both parties will need to give full and frank disclosure. Providing this early and being up front about your disclosure could assist negotiations and help avoid lengthy court proceedings.
Just as the payer, the recipient cannot prevent a future variation application to either decrease maintenance or to terminate it entirely. Before finalising your financial claims in the first instance, you should seek advice from a financial advisor to ensure you can make the most of any settlement. The court will need to consider that you can adjust without undue hardship in the event that maintenance is terminated and that their decision is reasonable and fair in all the circumstances. Reaching financial independence will of course be a factor that a court will consider in favour of a payer's application to vary, however, looking to secure your financial future without the fear of it being taken away can offer valuable peace of mind. Further, advice from a financial advisor may help in the presentation of your case in the event you find yourself defending an application to terminate your maintenance or to vary it downwards.
Yes. Parties are free to agree alternative arrangements between themselves, either directly, with the help of a mediator or other third party, or with the assistance of solicitors. However an agreement is reached, both parties should take independent legal advice before finalising any terms and any new agreement should be recorded in a consent order, that is then sent to court for approval. This will ensure there is clarity as to what has been agreed and provide both parties with an enforceable order in the event of any future breach.
Before either party issues an application, they are required to attend a Mediation Information Assessment Meeting (MIAM), unless one of a few limited exceptions applies. The MIAMs accredited mediator will discuss with you whether mediation is suitable in your case, before any court proceedings have started.
Any child maintenance payable under the Child Maintenance Service or CSA regimes will not be varied by the court and will only be varied upon an application for a new calculation to the scheme itself.
If child maintenance is payable pursuant to a court order, this can be varied upon an application by either parent (or the child, if they are over the age of 16 years old). Again, the court will look at all of the circumstances of the case, including the welfare of the child. A termination of spousal maintenance will not automatically mean a termination of child maintenance payable outside of the CMS or CSA regimes. If spousal maintenance has been terminated and income claims dismissed, a separate application for payments for the benefit of any children can still be made under Schedule 1 of the Children Act 1989. Such applications can include claims for periodical payments to benefit the child, payments for school fees and expenses associated with a child’s disability.
Until the judgment is analysed, the potential implications of Mills v Mills on future decisions in other maintenance variation cases cannot be assessed. Without the written judgment, it's difficult to ascertain how far reaching this case may be. An analysis of the judges' reasoning and consideration of any individual factors of the case will be necessary. Practitioners wait for the written judgment with baited breath. Watch this space for further analysis.
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.
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