How does maintenance work & what should divorcing clients expect?

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January 22, 2024
Posted by:
Laura Flanagan
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First published on FTAdviser on 22 January 2024

Whether a party will be ordered to pay or receive spousal maintenance is often one of the first questions a client will ask.

What is maintenance?

The court’s power to order periodical payments (commonly referred to as a maintenance order) derives from statute and can be made for the benefit of one party and/or their children. English judges have a wide discretion which is guided by the statutory factors in section 25 of the Matrimonial Causes Act 1973 (MCA), or the equivalent provision in the Civil Partnership Act 2004 (CPA).

How does the court decide?

When reaching a decision the court has to give first consideration to the needs of any minor children of the family and then keep in mind a common sense checklist of factors set out in s.25. The most relevant factors that the court must consider are the parties’ needs, their income and “earning capacities”, their ages, the duration of their marriage and any physical or mental disability either party may have. The court also must consider whether an immediate “clean break” is possible (i.e. there is no ongoing financial commitment). To the extent maintenance is payable, it should only be paid for so long as is required for one party to stand on their own two feet.

How much will I get/will I have to pay?

There is no statutory formula for quantifying spousal maintenance; indeed, the Court of Appeal once described the quantification as “an art and not a science”.

In SS v NS (Spousal Maintenance) [2014] EWHC 4183 (Fam), Mr Justice Mostyn (now retired) said “an award should only be made by reference to needs, save in a most exceptional case where it can be said that the sharing or compensation principles apply”. He set out a list of further considerations which deal with both the quantum of periodical payments and the length of time such an order should be made for. The relevant factors as to quantum are as follows:

  1. The evidence must show that choices made during the marriage have generated hard future needs on the part of the claimant.
  2. If needs are not causally connected to the marriage, the award should be aimed at alleviating significant hardship.
  3. The marital standard of living is relevant to the quantum of spousal maintenance but is not decisive. It must be weighed against the desired objective of eventual independence.
  4. The judge not only has to consider the individual items in the claimant’s income budget but must also stand back and look at the global total and ask if it represents a fair proportion of the respondent’s available income.
  5. If the respondent’s salary comprises a base salary and a discretionary bonus, the maintenance may be equivalently partitioned. Needs of strict necessity may be met from the base salary with additional discretionary items being met from the bonus (on a capped percentage basis).

In the 2005 case of Miller & MacFarlane, the House of Lords decided that fairness was the correct test and said that the three strands of fairness were needs, compensation and sharing.

Needs

The court’s assessment essentially requires a balance of one party’s income or earning capacity against the other party’s needs with the aim of achieving fairness. As well as considering evidence of both parties’ income and financial resources, the court will assess both parties’ income needs. Each party will prepare a budget which details their current and future annual expenditure. Baroness Hale said in Miller and McFarlane that needs should be set “at a level as close as possible to the standard of living which the parties enjoyed during the marriage”. Needs usually trumps the other two strands of fairness.

Sharing

The sharing principle (generally) provides each party with an equal share of the assets. It would be rare to share income equally, unless that was what was required to meet needs.

In the case of Waggott v Waggott [2018] EWCA Civ 727, the court was asked to determine whether a spouse’s future earning capacity was an asset to which the sharing principle applied. The wife in this case argued that she should not be required to use her sharing award to meet her income needs. The court determined that earning capacity is not an asset to be shared.

Compensation

These cases are extremely rare. The principle was described in Miller and McFarlane as being “aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage. For instance, the parties may have arranged their affairs in a way which has greatly advantaged the husband in terms of his earning capacity but left the wife severely handicapped so far as her own earning capacity is concerned. Then the wife suffers a double loss: a diminution in her earning capacity and the loss of a share in her husband’s enhanced income”.

The cases in which compensation may be considered are often those where the available assets exceed needs.

How long can spousal maintenance payments last?

An award for spousal maintenance can be made to last:

  1. For the parties’ joint lives;
  2. For a defined period of time – with that period being extendable or non-extendable.

Whilst these different time periods can apply, there remain some automatic end points for maintenance orders. An order for maintenance will end on the death of either party (alternative provision should be made to account for a paying party’s death during the subsistence of a maintenance order) or the receiving party’s remarriage or subsequent civil partnership.

As detailed by Mostyn in SS v NS, the court must consider a “termination of spousal maintenance with a transition to independence as soon as it is just and reasonable. A term should be considered unless the payee would be unable to adjust without undue hardship to the ending of payments. A degree of (not undue) hardship […] is acceptable”.

Given that the court has a duty to consider a clean break, awards made for the parties’ joint lives are becoming much rarer. Where parties are young, or their marriage was short, the court is far less likely to make an award to last for their joint lives.

An order to end on a specified term is far more likely. For parties with young children, often the term will be when the children cease secondary (or sometimes tertiary) education. In these circumstances, it may be considered that the receiving party, when both children start secondary education, can return to work, at least part time, and so there may be a reduction to the maintenance at that time. Where parties are nearing retirement and will then receive income by way of pension provision, the maintenance award could then terminate.

Whether or not the term for which maintenance is awarded should be extendable is really a matter for negotiation or discretion of the court. There are circumstances in which either may be more appropriate. In cases where there are no dependent children and the term was to end on the sale of a property or the receiving party reaching retirement age, it would not be appropriate for there to be an extendable term. Alternatively, if the parties have children and the receiving party is anticipating returning to work to achieve a certain income by a future date, it may be necessary to provide for a fallback should that not be achievable. In those circumstances, having an extendable term may be necessary.

Other types of maintenance orders

Secured Periodical Payments

This type of order is relatively rare and is usually considered appropriate in circumstances where an unsecured order may not be complied with. The payer is ordered to provide either a capital deposit or other asset by way of security for the maintenance payments.

Nominal maintenance orders

This type of order provides a safety net to the receiving party as it requires no immediate monthly payment but instead leaves open the option for a payment in the future should the receiving party need to vary the monthly sum upwards. A nominal order can be made in a variety of circumstances, but usually involves a payee with young children who can currently financially support themselves but may need additional financial support if things change in the future .

What happens if circumstances change?

Maintenance payments can be automatically varied on a regular basis (usually annually). This variation can be an automatic adjustment in order to inflation-proof, for example an annual increase based on the consumer prices index or on another factor.

Maintenance payments are also usually variable upwards or downwards on a discretionary basis during the term in which they are awarded. There does, however, need to be a change in circumstances. By way of example, the following circumstances may support a variation in maintenance: a significant increase or reduction in the payer’s income, an increase in one party’s capital assets from which an income could be generated, or the retirement of one or both of the parties. A variation based on one of these factors would not be automatic – the court would have regard to all the circumstances of the case when deciding whether to vary the award or not. It is also possible to capitalise the maintenance so that it is paid out in one lump sum.

What can clients expect?

Maintenance remains an important component of financial orders on divorce or civil partnership dissolution. This is certainly an area where expert advice is needed. Whilst advice on whether an order will be made at all and, if so, for how long is more straightforward, however, it is difficult to be precise as to the quantum of such an order. Each case is fact specific, and it is important that from an early stage, in either negotiations or court proceedings, careful thought is given to the budget being relied on in the context of the parties’ marital standard of living.

Peter Burgess, Partner, and Laura Flanagan, Senior Associate, at Burgess Mee Family Law

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