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Mills v Mills: the consequences of ill-advised financial decisions

Sep 29, 2018, 22:03 PM
Family Law, family court, divorce, financial agreement, periodical payments, basic needs. Mills v Mills [2018] UKSC 38
The Supreme Court judgment on Mills v Mills [2018] UKSC 38 was handed down by Lord Wilson on Wednesdat [18 July] with the overall impression being that it was the right result, reference having been made to wife’s cross-application to vary upwards her joint lives spousal periodical payments as a 'second bite of the cherry'.
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The Supreme Court judgment on Mills v Mills [2018] UKSC 38 was handed down by Lord Wilson on Wednesday [18 July] with the overall impression being that it was the right result, reference having been made to wife’s cross-application to vary upwards her joint lives spousal periodical payments as a 'second bite of the cherry'.

Mr and Mrs Mills (referred to as husband and wife) are now aged 52-years-old. They married in 1987, divorced in 2002 and have an adult son. Wife was a qualified beauty therapist and husband a qualified surveyor. In 2002 at the FDR, they reached a financial agreement that was reflected in a consent order which essentially provided for the following:
  1. The FMH was to be sold and wife was to receive the majority of the net proceeds and sale (being the majority of the parties capital) of £230,000;
  2. Wife to transfer her interest in policies to husband worth £23,000;
  3. Wife to transfer her shares in the husband’s surveying companies to husband; and
  4. Husband to pay the wife spousal maintenance (not index linked) for joint lives, ie until her remarriage or further order of the court. 
The result being the wife received the majority of the liquid capital; the husband had his businesses and was to pay the wife an income as she was not working at the time due to having suffered gynaecological issues following a late miscarriage in 1996.

H made an application in 2014 to discharge and capitalise with a lump sum of £26,000, vary downwards or impose a term on wife’s spousal maintenance. The wife cross-applied for an increase; both applications were made under s 31(1) of the Matrimonial Causes Act 1973. 

Section 31(7) of the Act provides for the court 'to have regard to all of the circumstances of the case… which shall include any change in matters to which the court was required to have regard when making the order to which the application relates'.

The case turned on its unusual facts which involved a succession of property purchases. First, the husband’s case in 2002 was that the wife could purchase suitable housing free of mortgage using the entire capital lump sum of £230,000. The wife’s case was that her housing needs were £350,000. The wife undertook the following property transactions:
a. House in Weybridge bought for £345,000 utilising a mortgage of £125,000. Sold in 2006 for £345,000 but the mortgage had risen to £218,000.
b. Flat in Wimbledon bought for £323,000, with a deposit of £48,000 and a mortgage of £275,000 (£62,000 of the proceeds of previous sale had not been used). Sold in 2007 for £435,000 with a slightly increased mortgage of £277,000;
c. Flat in Battersea bought for £520,000 with a deposit of £78,000 and a mortgage of £442,000 (£44,000 had not been used). Sold in 2009 for £580,000 leaving proceeds of sale of £120,000;
d. Between 2009 and 2015 wife rented 6 different properties in London.

When the matter came before HHJ Everall QC the wife had exhausted all her capital. Her income working as a part-time beauty therapist was £18,500 pa whereas husband’s income was £55,000 pa. He assessed the wife’s needs, which he accepted were very modest, and after allowing for her income the deficit was £17,292 pa, being £1,441 pcm. The existing order was for £13,200 pa or £1,100 pcm and he decided not to adjust the amount either way but dismiss both parties’ applications. 

In his judgment he comments that the wife would have been able to secure a home free of mortgage in 2002 but it had been reasonable for her to be ambitious and secure a mortgage. He also added that she had not managed her finances wisely but found she was not profligate or wanton and the husband could afford to continue to pay and the wife would need to adjust her expenditure. 

Both parties sought permission to appeal to the Court of Appeal and the case was heard by Sir Ernest Ryder and Lord Justice Longmore in 2017. They allowed the appeal and varied the payment from £13,200 to £17,292 pa relying on the fact that the judge did not give reasons for the trimmed budget and did not explain why the wife should live below her basic needs. 

The husband applied to appeal to the Supreme Court on several grounds but permission was only granted on one very narrow issue 'whether provision having already been made for the wife’s housing needs in the capital settlement, were the Court of Appeal erred in taking these into account when raising her periodical payments'.

The Supreme Court decided the Court of Appeal had got it wrong and relied upon the three Court of Appeal cases of Pearce v Pearce [2003] EWCA Civ 1054, [2003] 2 FLR 1144 North v North [2007] EWCA Civ 760, [2008] 1 FLR 158 and Yates v Yates [2012] EWCA Civ 532, [2013] 2 FLR 1070, drawing no distinction between rent and mortgage payments. 

In light of the Supreme Court decision, it appears that the magnetic factor is HHJ Everall QC’s calculation of the wife’s rental payments within her needs. The judgment helpfully sets out the calculation and how 60% was arrived at; in essence saying in order to meet the shortfall the husband would be obliged to pay 60% of wife’s rent. 

To conclude, never say never, the court was entitled to refuse the increase but not obliged to refuse. The court would need to give very good reasons for making that kind of order, ie that a spouse should fund the other spouse’s rental payment where that spouse had received a capital provision for re-housing. Ultimately the court has a very wide discretion but in this case the duplication for housing need was not found to be a very good reason. 

Many reports on this case have used the unattractive term of 'meal ticket for life' but the Supreme Court never had jurisdiction to discharge the periodical payments order. Section 54(4) of the Access to Justice Act 1999, states no appeal can be brought against a refusal of permission. 
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