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What are the most important cases about maintenance and income?

2nd June 2016

SS v NS (Spousal Maintenance) EWHC 4183 (Fam)

This is a recent judgment of Mr Justice Mostyn which shows the changing approach of the courts to spousal maintenance. The husband and wife were 40 and 39 respectively, and had been together for 11 years. The husband worked in banking. Though he was very successful, he was reducing his work load due to ongoing health concerns. The wife had not worked since the birth of the first child, but had taken on part-time work during the course of proceedings.

The judge considered the legal and ethical basis for spousal maintenance, and summarized the case law to-date. He found that an order for maintenance could only be made where there were income needs to be met and should be focused on facilitating the transition to independent living.

The judge put forward 11 principles which decisions relating to the provision of maintenance should address, including when it would be appropriate for there to be a clean break (i.e. a maintenance order coming to an end). These are:

1. An application is more likely to be successful where it can be evidenced that decisions and choices made during the marriage have led to future needs of the recipient, such as the length of the marriage and the existence of children.

2. Consideration of a clean break must be made and therefore an award should only be made by reference to needs even when the sharing or compensation principles apply.

3. Very rarely will an order be made for spousal maintenance where the need itself is not connected to the marriage, though this might include an order to alleviate significant hardship.

4. In every case the court must consider ending spousal maintenance with a transition to independence as soon as it is just and reasonable, even if there may be a degree of minor hardships in the transition period.

5. The starting point should be a presumption that the length of the payment term can be extended, unless a joint lives order can be significantly justified.

6. The length of the marriage and standard of living is relevant but is not decisive.

7. A judge examining the needs for the recipient should not only look at their suggested budget but should stand back and look at the global total, to see if the sum requested represents a fair proportion of the payers available income.

8. Where the income of the payer is comprised of a basic salary and a discretionary bonus, the award may be split between the two with the more substantive needs being met from salary and discretionary items over and above such needs from bonus payments, usually expressed as a percentage with a cap.

9. Where there is an application to extend the term for payment an assessment will be required whether, at the time the original order was made, there was an expectation of the ability of the payee achieving independence, and if so why.

10. On an application to discharge a joint lives order, the court should look at any original assumption that it was too difficult to predict eventual independence.

11. If the choice between an extendable and a non-extendable term is finely balanced, a decision should normally be made in favour of the economically weaker party.

Duxbury v Duxbury 1 FLR 7

Duxbury is one of the earliest and most important cases on how a court should impose a clean break. The parties had divorced after a marriage of 22 years, during which time they had enjoyed a high standard of living. The wife had not worked during the marriage.

At first instance, the court held that the wife should be able to enjoy a comfortable lifestyle for the rest of her life, awarding her a property and a lump sum designed to meet her maintenance needs for the rest of her life. The husband appealed this decision, arguing that the court should have factored in the fact that the wife was now cohabiting and that she might marry in future and should have made a periodical payment order so that it might vary it in future to reflect changing circumstances.

The Court of Appeal rejected the appeal, holding that cohabitation was irrelevant and the court was right to provide a lump sum which, when considering capital accrual and expenditure would maintain the wife at a certain level for life.

The result in Duxbury led to the court makes use of so-called Duxbury tables. These are actuarial tables which use a number of assumptions to calculate the correct lump sum for producing the desired amount of income over the course of a receiving partys life. These tables a designed so that the accrual and expenditure results in the fund being exhausted at the time of the parties death, thus providing maintenance for life and not additional capital. In high value cases, where maintenance is to be capitalized to effect a clean break, a Duxbury calculation will be the starting point for doing so.

Dickson v Rennie EWHC 4306 (Fam)

In the case of Dickson v Rennie, Mr Justice Holman considered whether it was necessary for the a parent to have received a maximum assessment from the Child Maintenance Service prior to applying to the court for top-up maintenance.

The court gave lengthy consideration to the statutory system for child maintenance, including the sections on when the court has jurisdiction, as well as previous case law on the point.

The learned judge concluded that it was crystal clear that the system was set up to only allow a top up application after a full assessment had been made. The result is that a parent cannot apply to the court for additional maintenance unless and until the other parent has been assessed at the maximum level.

o Vaughan v Vaughan EWCA Civ 349

This case provided important guidance on how the court should approach matters where one of the parties has remarried, and thus has a new family with its own needs.

The couple had married in 1967, separating in 1981 and divorcing four years latter. The husband was a highly successful QC, and had built up significant wealth from his career. At the time of the divorce, the husband had been ordered to pay £27,000 per annum to his wife. Many years later, the husband sought to have this order discharged, with the wife cross-applying for a capitalized lump sum.

At first instance, the judge discharged the periodical payments order, holding that the wife had capital which she could liquidate to produce income. The judge had also attributed certain items in favour of the second wife, which decreased the income which he found the husband had available.

Lord Justice Wilson, then a Court of Appeal judge, accepted that the first instance judge was wrong to do this. The court had erred in its first decision as it had given priority to the needs of the second wife. He also felt it was wrong to analyse how the wife should amortise her capital, and therefore ordered that the wife should receive a capitalized sum of £215,000, pitched to produce an income of £46,000 per annum.

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