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Spousal maintenance - how much and for how long?
These two questions vex even the most experienced family law practitioners. Disputes over spousal maintenance often preclude an early settlement. Many practitioners have also commented that the approach to an award of spousal maintenance around the country is widely inconsistent, with regional variations being particularly noticeable.
In this article I consider recent judgments regarding the quantification of periodical payments. In the next article I shall consider the term of periodical payments orders. On the issue of quantification of periodical payments orders, the authorities often exhort practitioners to return to the language of statute, that is to say the parties’ income, earning capacity and other financial resources under section 25(2)(a) of the Matrimonial Causes Act 1973, and their respective needs, obligations and responsibilities under section 25(2)(b). We are however also reminded that fairness is the objective. Fairness comprises the principles of needs, compensation and sharing. How do those principles fit with the language of statute? In McFarlane v McFarlane; Parlour v Parlour  EWCA Civ 872, Thorpe LJ stated: ‘Clearly in the assessment of periodical payments… the overriding objective is fairness.’
He went on to say, however, that ‘the cross-check of equality is not appropriate’. Accordingly, unlike in the division of capital, equality is not the starting point. If equality is not the starting point, is there any formula for calculating or fixing the quantum of periodical payments? In V v V  2 FLR 697, Coleridge J stated: ‘There is almost no guidance or authority in relation to the way in which the court should determine [periodical payments]… there can be no hard and fast rule in these cases, particularly in relation to the division of available income.’
If there is no formula, and as the cross-check of equality does not apply to periodical payments, how are maintenance awards to be quantified when applying the principles of needs, compensation and sharing? The starting point is the House of Lords decision in Miller v Miller; McFarlane v McFarlane  2 AC 618. The comments of Baroness Hale suggest that the sharing principle and the compensation principle justified an uplift in the quantum of periodical payments above needs: ‘[The wife] is also entitled to share in the very large surplus [income], on the principles both of sharing the fruits of the matrimonial partnership and of compensation.’ That comment should however be taken in the context of her earlier comment in which she stated: ‘If capital has been shared equally and is enough to provide for need and compensate for disadvantage, then there should be no continuing financial provision.’
In the same judgment, Lord Nicholls suggested only compensation would justify an uplift over a needs-based maintenance claim: ‘Clearly in this situation the wife is entitled to a periodical payments order in respect of her financial needs… but it would be manifestly unfair if her income were confined to her needs. This is a paradigm case for an award of compensation in respect of the significant future economic disparity.’ Following on from the House of Lords decision in Miller; McFarlane, Family Division president Sir Mark Potter provided some clear and useful guidance in VB v JP  EWHC 112 (Fam), in which he said: ‘On the exit from the marriage, the partnership ends and in ordinary circumstances a wife has no right or expectation of continuing economic parity (“sharing”) unless and to the extent that consideration of her needs, or compensation for relationship-generated disadvantage, so require. A clean break is to be encouraged wherever possible.’
The president’s comment provides clear guidance that when looking at the principles of fairness the driving force in a periodical payments claim should be that of needs, rather than sharing. Such an approach was reflected in the clear and forceful comments of Mostyn J in the recently reported case of B v S (Financial Remedy: Marital Property Regime)  EWHC 265 (Fam). At paragraphs 73 to 79 of his judgment he gave clear and strident views regarding the quantification of periodical payments.
Before reaching his conclusion, Mostyn J provided an overview of recent case law in assessing periodical payments. In his opinion the law was ‘not so clear’ and a compensation-based award was ‘only likely to arise exceptionally’. Considering the comments of Lady Hale and Lord Nicholls in the House of Lords in Miller; McFarlane, he was of the view that the only factor that would ever justify an uplift in a periodical payments award over meeting needs would be that of compensation.
Mostyn J acknowledged that the sharing principle is sometimes viewed as being applicable to quantifying a periodical payments claim to reflect the theory that post-separation earnings derive from an earning capacity built up during the marriage. That earning capacity could therefore be viewed in some intangible way as a piece of matrimonial property which is to be fairly shared. Mostyn J however viewed the theory as problematic because the only reason the income is there post-separation is because of the work undertaken post-separation.
Mostyn J felt that simplicity and clarity were needed just as much in the quantification of periodical payments as in the division of capital. Simple and fair guidance would enable the vast majority of cases to settle. Accordingly, save in exceptional cases (such as McFarlane where there was a claim for compensation), a periodical payments claim should be calculated ‘by reference to the principle of need alone’. He went on to say that ‘to allow consideration of the concept of sharing to intrude in the assessment of a periodical payments award seems to me to be based on a doubtful principle, and is replete with problems of quantification by any sure standard’. Furthermore, if the concept of sharing were to uplift an award above an assessment of needs, how would a judge set about doing it? For example, would it be a third, 40% or 20%? He concluded that there were no signposts along the road to a fair award.
In a similar vein, Charles J considered the wife’s earning capacity and distributions from the wife’s family trusts when assessing an appropriate periodical payments award in G v G  EWHC 167 (Fam). In considering the rationale for redistribution, Charles J stated that ‘the most common rationale is that the relationship has generated needs which it is right that the other party should meet’. He went on to say that, ‘in general, it can be assumed that the marital partnership does not stay alive for the purpose of sharing future resources unless it is justified by need or compensation’. Reflecting the comments in Miller; McFarlane, ‘the ultimate objective is to give each party an equal start on the road to independent living’.
In terms of the interaction between the division of capital and payment of maintenance, Charles J said: ‘If capital has been equally shared and is enough to provide for need and compensate for disadvantage, then there should be no continuing financial provision.’ Although the views of Charles J were not as emphatic as those of Mostyn J in B v S, they clearly reflect the earlier comments of the president in VB v JP and support the contention that a periodical payments award should be driven by the principle of need rather than the principle of sharing.
Next time the focus will be upon the terms of periodical payments orders and in particular the recent cases regarding the imposition of a term on such orders or the extension of existing terms.
Andrew Newbury, is a family law solicitor at Pannone
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