Reopening a financial settlement after divorce

After deciding what should happen to the children, reaching an agreement on financial arrangements is usually the biggest challenge when getting divorced. The relief you feel when an agreement is finally struck can be overwhelming, particularly if you are the person who will have to fund it. Knowing what your former spouse is entitled to and the steps you will need to take to ensure they are paid can provide much needed certainty in a time of inevitable turbulence.

 

But what happens if, years later, your former wife or husband comes knocking at the door asking for more money? This is a question the Supreme Court had to rule on recently in the case of Mills v Mills (2018). Charles Tennant, family law expert at Warners Solicitors in Kent looks at the court’s decision and what it could mean for you if faced with a similar request.

 

Background

Mr and Mrs Mills had been married for 15 years when they decided to divorce. In order to settle financial matters between them it was agreed that Mr Mills would pay Mrs Mills a lump sum of £230,000 and ongoing payments of £13,200 each year until one of them died or she remarried.

 

Mr Mills assumed that the lump sum would be used to buy a house without the need for a mortgage given that his former wife had limited earning capacity due to health problems. Instead, Mrs Mills used the money to purchase successive, mortgaged properties which she could not afford. This led to her ending up in rented accommodation having accumulated over £40,000 of debt.

 

To help cover her now significantly increased living costs, Mrs Mills asked the court to vary the previously agreed financial settlement by increasing Mr Mills’ annual payments to just above £17,000. Mr Mills objected to this and instead sought to bring the annual payments to an end or to at least have them substantially reduced.

 

What the court decided

While the court acknowledged that it had the power to vary a financial settlement where there had been a material change in circumstances and it was appropriate to do so, it declined to make any changes in this case.

In so far as Mrs Mills’ application was concerned, this was rejected on the basis that she alone was responsible for the predicament she now found herself in and it was therefore unfair to expect Mr Mills to bail her out. Very good reasons would need to be shown for the court to arrive at a different decision, particularly given that adequate provision to meet Mrs Mills’ housing needs had already been made and making any further provision would effectively result in Mr Mills having to pay twice.

In so far as Mr Mills’ request was concerned, the court decided it did not have the power to interfere with an earlier court ruling which decided that no change in arrangements was appropriate. However, the court did feel compelled to stress that there may be cases where previously agreed periodical payments could be brought to an end or reduced in amount, particularly where it could be shown that the spouse in receipt of those payments was now capable of standing on their own feet and of adjusting to a life without continued support without suffering undue hardship.

 

Implication for other cases

Although the decision in Mills v Mills was based on a particular set of facts, there are some points which will be of relevance in other cases where variation of a financial settlement is sought. These include:

 

  • the improbability of the court requiring a former spouse to effectively pay twice to cover the same capital need, for example to discharge a mortgage or buy a new home, particularly where the original payment has not been used for the intended purpose or has otherwise been squandered or unwisely invested; and
  • the court’s clear wish to dispel any illusion divorcing couples may have that annual payments agreed as part of the divorce process must be allowed to continue indefinitely, particularly where they no longer justified. As the court said, financial settlements following divorce should not be viewed as a meal ticket for life but as a means of enabling both spouses to start again, wherever possible operating financially independently of one another.

 

For advice on financial settlements following divorce, or any other family law matter, please contact Charles Tennant on 01732 747900 or email c.tennant@warners.law to find out how we can help.

 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.

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