Shared Care And Financial

Recent case law to help ourselves in understanding how the Court is now approaching the quantification of spousal maintenance

The general rule has been that if there are small children at the time of the divorce, the main carer ought to have what is known as a "Joint Lives" maintenance order, which means that it ends when the payer dies. This conflicts with the imperative under s25A of the Matrimonial Causes Act 1973 that the Court has a duty to terminate financial ties between the parties as soon as possible, to effect a clean break. Even if the main carer has a good job of his or her own it is likely that she will have a "Nominal" maintenance order of five pence a year, in any event where there are minor children at home. This is not actually paid.

An Order which terminates at a specified time is known as a "Term" order. These Orders are becoming more common. In the recent case of L v L (Financial Provision) [2011] EWHC 2207 (Fam) the District Judge in London made a joint lives order in favor of a 44- year old wife who had a shared care arrangement with her husband in respect of two children aged 9 and 12. The wife was a fashion designer and also owned a working farm. Her husband had to pay £47,500 a year to the wife and the children together with school fees. The husband appealed as his own income from his business was £82,000 a year net and left him very little to live off.

On appeal, the High Court Judge said that this was a case that "cried out for a term order". This is because the wife owned her own farm, the children spent a considerable amount of time with their father under the shared care arrangement and the wife had worked throughout the marriage. She said there was a "reasonable expectation that the wife can and will become self-sufficient."

1. How much?

How do the Courts now assess quantum of maintenance for spouses on divorce? For a long time the courts confined awards to the less well-off spouse and assessed them according to their "reasonable needs". That all changed with the case of White v White in 2000 which brought in a new concept of the "Yardstick of Equality" which was meant to end the judicial discrimination against women. It ushered in a new era of equality of positions after divorce moving forward, whereas the stay at home spouses historically had faired very poorly after the divorce in contrast with the breadwinning spouse. Commentators and divorce lawyers have now argued that this in turn has engendered an overly generous approach towards the non-contributing spouse which now characterises the English family court. Unflatteringly, we are the divorce destination for all comers, no matter how tenuous their link with England. A recent case in point is Golubovich in 2010 where a Russian couple in their early 20's sought respectively to litigate in the country which would serve them best (https://www.telegraph.co.uk/news/7888434/Judge-slams-foreigners-use-of-British-divorce-court.html). England took them on. It has been the case on family law that the pendulum has swung on one direction or the other, resulting in extreme results.

An example of this extremism would be the "sharing principle" which has been developed in the case of McFarlane (2006) by the House of Lords. Judges have said the sharing principle applies equally to assets as to spousal maintenance because the earning capacity that the husband now has was built up during the marriage and therefore is to some extent, a kind of matrimonial property. The problem with this was summarised by Mr Justice Mostyn in B v S (2012) EWHC 265:

"At the end of the day the only reason there is income after separation is because of work done after separation".

If the only reason the husband needs to work after the divorce is to pay maintenance, why shouldn't he work fewer hours? Mostyn went on to say that a periodical payments claim should be judged or settled by reference to the principle of need alone.

If that is the case and if the law is going to move in that direction, then we are reverting to a pre-White situation.

1. When should Maintenance be capitalised into a Lump Sum?

The issue of capitalisation of a maintenance order usually crops up after a number of years when the maintenance has been paid, and perhaps the payer has come into a large lump of money and is therefore in a position to "pay off" his maintenance claims early. More exceptionally, if there is a great deal of capital at the time of the divorce, the court may capitalise the (usually wife's) maintenance claims at that stage in order to effect a clean break between the parties. In either event, the Court will already have assessed the amount of maintenance and the duration and will then look at the payer's ability to discharge the claim in one go.

In general, when looking at how a sum of say £15,000 a year payable to a 44 year old wife could be quantified into a lump sum payment, the courts have looked at "The Duxbury calculations". These are tables which have been put together as a result of a case of the same name and are based upon an investment rate of return of 3.75% and a capital return of 3%. Today these assumptions are extremely optimistic. Also the life expectancy tables from which they are based were last reviewed in 1983 and therefore everything about the Duxbury tables is acknowledged to be outdated and unrealistic. As a consequence, the Courts have been taking less and less note of them referring to them as "a tool not a rule". The Courts have always been tempted to in effect add a cherry on top of the capitalisation sum in favour of the payee. Having said that, where as he has managed to settle matters between them, rather than litigating in the Court, generally a payer will be able to get away with a slightly lower lump sum than would be shown in the Duxbury tables, due to the payee's accelerated receipt of her maintenance.

However, husband payers need to be aware of possible non-disclosure of remarriage plans by their former wives. Maintenance Orders terminate upon remarriage so it is important that ex-husbands investigate fully whether their maintenance Orders may come to an end sooner in any event. Cohabitation of a wife does not necessarily lead to any change at all in the amount or duration of periodical payments. The case of Dixon v Marchant [2008] 1 FLR 655 is instructive. There the husband payer was approaching retirement and wanted to pay his ex-wife off. He knew her to be in a relationship with the same man for whom she had left the marriage some years previously, although she had always denied that there was anything more than companionship between them. Having asked several times during negotiations between solicitors whether she was cohabiting, and receiving denials on each occasion, he proceeded to pay her a large lump sum in settlement and capitalisation of her maintenance claims. Six months later she had remarried. When the husband sought to overturn the payment on the basis that the wife had not disclosed her remarriage intentions, the court found that Mrs Marchant truly had not decided to marry at the time of settlement, and that intention came later, albeit not very much later.

Conclusion

It is difficult to say where we are with maintenance. If L v L is to be trusted, when we are moving away from Joint Lives maintenance orders and if B v S is true, then reasonable needs are again in the ascendency. All these cases are in the High Court however and not precedent-setting in the way that Court of Appeal and Supreme Court cases are. We can only hope that District Judges will take note and apply these principles in their daily caseload.

The merits of the above must be fully explored with a regulated solicitor