Maintenance is not a “meal ticket for life”

Waggott v Waggott [2018] EWCA Civ 727. In a recent case heard by the Court of Appeal, involving a multi-millionaire couple; the Court provided a clear approach for the treatment of earning capacity and the term of spousal maintenance in financial remedy proceedings.

The Facts

Mr and Mrs Waggott both worked as accountants; they married in 2000 and in 2001 Mr Waggott took up a new job which required them to move and for his wife to give up work. The parties separated in 2012 and by this time they had built up substantial capital assets worth £14.4 million.

When the case first went to Court, Mrs Waggott received a settlement of £9.76 million and ongoing maintenance until the death of the first of them at the rate of £175,000 per year. In making the award, the Court factored in the income her capital would provide.

Mrs Waggott appealed and sought a share of her husband’s post separation bonuses and annual maintenance for joint lives of £190,000. Mrs Waggott claimed that her husband’s future earning capacity was a matrimonial asset since it was built up during the course of the marriage. Accordingly, she argued, it should be shared with her like the more obvious matrimonial assets. She also claimed that she should not have to make use of her capital to meet her income needs. Further, she submitted that the compensation principle should apply; in other words that she had suffered a relationship generated disadvantage for which she should be compensated.

Mr Waggott cross appealed on the basis that the Judge had not given enough consideration to the law’s requirement for maintenance to end once the recipient could adjust to its absence without undue hardship and was wrong to order a joint lives maintenance order.

The Judgment

The Court of Appeal dismissed the wife’s appeal. Mrs Waggott’s argument that earning capacity was capable of being a matrimonial asset was rejected. The Court of Appeal held that any extension of the sharing principle to post-separation earnings would “fundamentally undermine the Court’s ability to effect a clean break”.

Additionally, it was held that to protect Mrs Waggott’s capital from being used to meet her income needs would again conflict with the clean break principle. The Court of Appeal did not accept Mrs Waggott’s argument in respect of the compensation principle as Mrs Waggott had not sustained a financial disadvantage greater than the sum awarded to her.

Mr Waggott’s cross appeal was allowed and an order expiring in 2021 was made.  It was held that the judge at first instance had taken too narrow an approach and it should have been considered whether it was possible for the wife to use part of her capital to meet her income needs.

Comment

This judgment highlights the fact that spousal maintenance is much less generous than before. Joint lives orders are increasingly rare and maintenance is not “a meal ticket for life”. The approach adopted by the Court in this case will prove significant for financial remedy cases going forward. Any spouse seeking an order for joint lives maintenance will face an uphill battle.

If you require any assistance in relation to the issues discussed, please contact a member of the Blake Morgan Family team.