An unusual maintenance variation case

finances and divorce

Reported cases on maintenance variation (i.e. where one party applies to the court to increase or decrease the amount of a maintenance order) are relatively rare these days. The case B v G, however, was also unusual for another reason.

Normally if a party paying maintenance wishes to have the amount of the maintenance reduced the reason for the reduction is that their disposable income (i.e. what they have available after paying their essential outgoings) has gone down through no fault of their own, thereby meaning that they can no longer afford to pay the maintenance at the current rate. In B v G, however, the husband’s disposable income went down due to his own actions.

The background to the husband’s application to have the maintenance reduced was as follows:

  1. The parties were married and lived together for about 12 years.
  2. They have one son, who is now aged 12.
  3. The husband is aged 65. He does not work, relying upon a “family foundation” for his income. The foundation now has funds of about £2.4 million.
  4. The wife is aged 50 and also does not work, her priority being looking after the child.
  5. In November 2013 the court made a financial remedies order. This provided that the former matrimonial home should be sold and that the wife should receive £1.6 million from the net proceeds of sale. The wife and child would continue to reside in the property until it was sold. The order also provided for the husband to pay maintenance for the wife and child in the sum of £5,417 per month. In addition the husband would pay the child’s school fees.
  6. A buyer for the house at the right price could not be found. The husband, wanting the wife to move out, obtained a £1.6 million loan against the assets of the family foundation in order to ‘buy her out’.
  7. The interest on the loan was £64,000 per annum, which obviously the husband had to pay. This additional burden meant that, according to him, he could no longer afford to pay the maintenance order, or at least the full amount of it. Indeed, he stopped paying the maintenance in July last year.
  8. The husband applied for a downward variation of the maintenance order, seeking to have it suspended or reduced to zero. His application went before Mr Justice Holman in the High Court on the 17th of January last.

The most interesting part of Mr Justice Holman’s judgment for me is when he dealt with the issue of the husband bringing his financial difficulties upon himself. He said:

“The effective case and position of the husband is that, as he has not been able to achieve a sale of the house, he has now been faced with paying that interest for a prolonged period of time and simply cannot afford, concurrently, to pay the interest as well as maintain the currently ordered levels of periodical payments and, also, the school fees. I stress and record that the husband has made crystal clear several times today that, come what may, he will always ensure that the school fees for their son are paid punctually and in full, and, in everything which I say in this judgment and decide today, I rely absolutely upon the husband being as good as his word in relation to the school fees. But that does not alter the essential dilemma that, currently, the husband is burdened by an obligation to pay interest in the significant sum of £64,000, having made that decision to pay the lump sum to the wife sooner than he needed to. It could, of course, be argued that that was his own unilateral decision, he went into it with his eyes open and should now carry the consequences. But family law has to be reactive to the realities of financial situations as they evolve.”

It is that last sentence that I find particularly interesting: “…family law has to be reactive to the realities of financial situations as they evolve.” Clearly, the practical reality was that the husband could no longer afford to pay the maintenance at the same rate and, after all, the wife is now enjoying the benefit of the money she has received (she has recently purchased a new home for herself).

Having said that, Mr Justice Holman did not feel that he could accede to the husband’s wish to have the maintenance reduced to zero. If he were to do so, that would mean that the wife would have to use up her remaining capital to live on, and that would not be fair to her. In the circumstances he reduced the maintenance to the monthly sum of £3,500. The husband would continue to pay the school fees, as he had done throughout.

As to the maintenance arrears that had accrued, Mr Justice Holman was not prepared to remit (cancel) these. Instead, they would be paid to the wife out of the proceeds of the sale of the house, whenever that happens.

The full report of B v G can be found here.

Image by Howard Lake via Flickr under a Creative Commons licence

John Bolch

John Bolch often wonders how he ever became a family lawyer. He no longer practises, but has instead earned a reputation as one of the UK's best-known family law bloggers.

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1 comment

Terry Fitzgerald - March 10, 2017 at 10:00am

Very interesting !

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