ICAEW.com works better with JavaScript enabled.

Case law: Ex-wife who had mismanaged lump sum awarded to buy a home could not claim increase in annual maintenance to cover consequent rental costs

A divorcing spouse receiving a lump sum and annual maintenance payments as part of the financial settlement should ensure the lump sum is wisely managed and/or invested, as they may not be able to secure increased annual maintenance payments to cover the consequences of mismanaging it, a court has ruled.

September 2018

This update was published in Legal Alert - September 2018

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A couple who were married for 13 years divorced in 2002, after separating in 2000. Part of the financial settlement included a lump sum payment to the wife of £230,000 to enable her to buy a new home without a mortgage (as it was considered unlikely she would get one because of ill health), and annual maintenance payments of £13,200.

In 2015, the husband applied to court to stop making the maintenance payments on payment of a modest capital sum, or alternatively for a downward variation of the payments. His ex-wife had overstretched herself in the years after the divorce, taking out mortgages she could not afford so that, at that time of his application, she was living in rented property, had no savings left and debts of £42,000.

However, she made a counter-application to increase the maintenance to around £17,300 on grounds she now had to pay rent, which had not been taken into account when the original award was made. The Court of Appeal ordered the ex-husband to increase the payments.

The Supreme Court overruled the Court of Appeal. It said the original award had included a lump sum to meet her housing needs and the husband should not have to pay for the consequences of her financial mismanagement over the last 16 years and having to pay her rent would mean he was paying her housing costs twice. It said, "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".

However, it restored the original annual maintenance payments of £13,200 – even though the ex-husband had already been paying maintenance for three longer than his marriage had lasted.

Operative date

  • Now

Recommendation

  • A divorcing spouse receiving a lump sum and annual maintenance payments as part of their financial settlement should ensure the lump sum is wisely managed and/or invested, as they may not be able to secure increased annual maintenance payments to cover the consequences of mismanaging it

Case ref: Mills v Mills [2018] UKSC 38

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

Copyright © Atom Content Marketing