Spousal Maintenance – Court Continues Its Assault On Joint Lives Maintenance Orders.

A few weeks ago, the Court of Appeal ruled that Mrs Waggott’s maintenance payments shall end after three years thus ending her entitlement to maintenance on a joint lives basis. Lord justice Moylan stated that “this case raises issues about the application of, and the relationship between, the principles of need, sharing and compensation”. Dubbed as “the meal ticket for life” case, it’s impact could be severe on those seeking long term spousal maintenance.

Background

Mr and Mrs Waggott were both accountants when they met. The parties started living together in 1991, married in 2000 and separated in 2012. They had one child together who was born in 2004. In 2001 (due to the husband changing employment and the parties having to relocate to live near London) the wife left her employment as an accountant. Other than a short period in 2002/2003, the wife had not worked in paid employment again. At the time of divorcing, overall assets amounted to £16.2 million, Mr Waggott’s net income for the tax year 2013/2014 had been just under £3 million.

A final hearing took place in 2014, however due to various points being raised by the parties, further hearings took place. In 2016, the judge awarded Mrs Waggott a capital sum of £9.76 million which included a percentage of the husband’s deferred remuneration. The Judge ascribed a net income of £60,000 to the wife’s “free capital” and awarded her spousal maintenance for life of £115000 in order to meet her annual income needs of £175,000.

Mrs Waggott, unhappy with the award, appealed the decision requesting a further £23,000 a year in annual maintenance payments and an ongoing share of the husband’s deferred bonuses. Mr Waggott cross appealed, seeking to restrict the maintenance period to a period of five years for when the original award had been made.

The Legal Issues

Lord Justice Moylan identified three issues that he had considered alongside the circumstances of the case when reaching his judgement.

1. Is an earning capacity capable of being a matrimonial asset to which the sharing principle applies?

LJ Moylan very clearly said no as he believed that any extension of the sharing principle to post separation earnings would fundamentally undermine the court’s ability to effect a clean break.

2. How should the court assess whether an award determined by application of the sharing principle meets the parties needs? To what extent is it fair for the wife to be required to use her sharing award to meet her income needs when the husband will meet his needs from earned income?

The Court of Appeal rejected Mrs Waggott’s argument that her capital should be preserved and should not be used to meet her income needs ie.to give her an assured income of £60,000. As to whether it was fair to do so, depends upon the circumstances of each case. In this case, LJ Moylan believed that Mrs Waggott would be able “to adjust without undue hardship” to the termination of maintenance.

3. Compensation – Does it apply?

LJ Moylan’s view was that “compensation is for the disadvantages sustained by the party who has given up a career. The court would have to determine on a balance of probabilities that the applicant’s career would have resulted in them having resources that are greater than those which they will be awarded by application of either the need principle or the sharing principle. Further, the court must separately determine whether, and if so, how, this factor should be reflected in the award so as to ensure that it is fair to both parties”.

Determination

The Court of Appeal dismissed Mrs Waggott’s appeal. Furthermore, the court allowed Mr Waggott’s appeal and imposed a term order ending Mrs Waggott’s maintenance payments on 1 March 2021.

What does this mean?

1. Earning capacity should not be shared equally.

2. Joint lives order replaced with a fixed term.

3. Mrs Waggott’s claim for a share of Mr Waggott’s deferred bonuses was denied.

The message therefore is clear to those seeking long-term maintenance payments that the Courts are adopting a very strict approach to such claims. It is therefore vital for any person seeking long-term spousal maintenance to obtain specialist legal advice when considering the impact of divorce upon their financial situation.

If you wish to discuss your case and how Coley & Tilley can help you reach a financial settlement that works for you, please contact Sandeep Sandhu (Associate) on 0121 643 5531 or via email on sandeep.sandhu@coleyandtilley.co.uk  We offer a free initial appointment at our city centre office. More information about the services that we offer can be found on our website: https://coleyandtilley.co.uk/

*Disclaimer: Please note that the above is not intended as legal advice. Specialist legal advice is recommended in relation to your own case.