Mills V Mills

The Supreme Court has now given judgment on the case of Mills v Mills 18 July 2018. 

The essential background at time of order : 

Cohabitation 1986

Married 1987

H left the family home 2000

Divorced 2002

1 child of the family living with W

Consent order providing Wife with vast majority of the liquid capital : £230k

At the time of the order W put her housing needs at £350k and H put them at £230k.  It was agreed she had no mortgage capacity at the time.

H received £23k from proceeds sale of family home and shares worth £23k and retained his 2 surveying businesses (not valued).

H was ordered to pay periodical payments (not index linked) for life at the rate of £1,100 a month.  There were issues about whether or not she could work again.

What happened post order:

Notwithstanding the apparent agreement she had no mortgage capacity in fact W bought a house for £345k with a £125k mortgage having restarted working part-time as a beauty therapist.  

In 2006 she sold her house for the same price she had bought it but she had increased the mortgage from £93k to £218k.  

She then bought a flat for £323k paying a deposit of £48k and obtaining a mortgage for £275k.  W had spent in excess of £60k of the proceeds of sale otherwise than  upon the costs of purchase.  

In 2007 she sold the flat for £435k.  The mortgage was £277k by then.  

She bought another flat for £520k with a deposit of £78k and borrowing of £442k.  About £44k of the net proceeds of sale were spent otherwise than towards the purchase of the new flat.  

In 2009 she sold the flat for £580k when the mortgage was £442k and she netted £120k.  

She then started renting.

2009 – 2015 she rented 6 successive properties in London and Surrey.

By April 2015 she had no capital at all but liabilities of £18k and a tax liability of £20k.

Now

Both parties are now 52.  H has remarried and has a child with his second wife and lives in a heavily mortgaged house.  His income is about £55k. 

The applications

H applied for either  a discharge of the maintenance order upon payment of a modest lump sum, or for the imposition of a term of years and/or downward variation. 

W sought to increase maintenance (to include all her rent).  

W’s needs were put at £35,792 including £10,200 rent.  The court found her income to be £18,500.  There was therefore as shortfall of about £4k between her income (from her work and maintenance) and her reasonable needs.  

First instance decision 

The first instance judge found she had not been profligate or wanton but essentially had not managed her finances wisely.  He found she had proffered no satisfactory explanation for the increases in the mortgage borrowing. Her needs had effectively increased by reason of her choices.  However the judge rejected H’s submission that W’s need to pay rent of £10,200 should be entirely eliminated from the total annual need which it would be appropriate for him to meet but said it was  “fair that the husband’s contribution to the wife’s needs should not include a full contribution to her housing costs.”  The judge left the order unchanged.  Despite W now earning he did not reduce the maintenance and the net effect was H was now effectively paying 60% of W’s rent.

Both H and W sought permission from the Court of Appeal to appeal against the respective dismissals of their applications

Court of Appeal 

Black LJ granted Mrs Mills permission to appeal to the Court of Appeal, on limited grounds, namely that the first instance judge was looking at Mrs Mills’ needs too restrictively when he declined to increase the maintenance notwithstanding that on the evidence Mrs Mills was unable to meet her essential needs.   An element of those needs was rent. The Court of Appeal increased the level of maintenance that Mr Mills had to pay.  PP were increased to include the £4k pa shortfall.

Husband then appealed. 

The Supreme Court 

Mr Mills only had permission to appeal the decision of the Court of Appeal on a single ground: whether provision having already been made for W’s housing costs in the capital settlement, the Court of Appeal erred in taking those into account when raising her periodical payments.  

Para 32 :              ‘The husband filed a notice of appeal to this court. He challenged the increase in the order for periodical payments directed by the Court of Appeal. But he also purported to challenge its refusal to discharge the order for periodical payments; and, alternatively, its refusal to set a fixed period on the wife’s continued receipt of them and/or to vary the amount of them downwards. In these respects he was, however, purporting to challenge the Court of Appeal’s refusal to permit him to appeal to itself on these grounds and, by section 54(4) of the Access to Justice Act 1999, no appeal can be brought against a refusal of permission. So the order of this court was to limit its permission for him to appeal to the single ground whether, in light of the fact that provision had already been made for the wife’s housing needs in the capital settlement, the Court of Appeal had been entitled to interfere with the judge’s determination not to make full allowance for her need to pay rent in the continuing order for periodical payments. Unfortunately the husband’s advisers considered that the terms of the limited grant of permission could in some way prove broad enough to enable them to make submissions at the hearing along the wider lines of his impermissible challenge to the Court of Appeal’s refusal to grant him permission to appeal to it. So at an early stage of the hearing the court had to re-emphasise the limited ambit of its inquiry in this particular case’.

Lord Wilson started the judgment by summing up the sole issue before the SC:

Para 1 : ‘In circumstances in which at the time of a divorce a spouse, say a wife, is awarded capital which enables her to purchase a home but later she exhausts the capital by entry into a series of unwise transactions and so develops a need to pay rent, is the court entitled to decline to increase the order for the husband to make periodical payments to her so as to fund payment of all (or perhaps even any) of her rent even if he could afford to do so?’

Their unanimous answer was yes.

The court looked in particular at :

Pearce v Pearce [2003] EWCA Civ 1054,

North v North [2007] EWCA Civ 760,

Yates v Yates [2012] EWCA Civ 532, 

W’s attempts to distinguish the mortgage instalments disallowed in the cases of Pearce and Yates from payments of rent did not find favour with the court.

H did not have to pay extra maintenance simply because W lost all her capital on unwise property purchases and now needed more money for rent.

It is sad to say the least that the Supreme Court could not/did not take the opportunity to deal head on with Husband’s (original) argument that rent should form no part of W’s income needs budget. H was effectively obliged to simply argue why the first instance judge was right.  

H, understandably, remains aggrieved that he still has to pay his former spouse, £1,100 a month. He is reported as saying (in The Times):

“It does not seem just that I have to pay her while she only works three days a week and I have to go out to work five days a week. That seems like discrimination. Surely she has responsibility to move towards financial independence.”

It seems to me he has a valid point.

Leisha Bond

St Philips Chambers.  Birmingham  18 July 2018

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