Periodical payments and financial mismanagement on divorce – the conclusion of Mills v Mills

The Supreme Court’s judgment in the case of Mills v Mills marks the end of a saga that has been closely watched by top London divorce lawyers. The case has clear implications for a spouse who is in receipt of periodical payments following divorce and who then mismanages their finances over a period of time. The best divorce lawyers may also offer the case as comfort to a spouse ordered to make periodical payments, as reassurance that he or she will not necessarily be expected to foot the bill for the financial mismanagement of their former partner.

Mills v Mills – the facts

divorce lawyers in London – and across the UK – will have been aware, at least in the abstract – of this case. The potential implications of the final outcome of Mills v Mills have meant that it has never been far from the headlines on its journey to the Supreme Court.

The couple divorced in 2002. The financial matters arising from the divorce were settled by a consent order. Mr Mills had agreed to pay periodical payments to his ex-wife, of £1,199 per month. Mrs Mills also received a lump sum sufficient to enable her to buy a house outright. Rather than doing this, Mrs Mills secured a mortgage and proceeded to buy and sell a series of properties, borrowing more money at each time, spending rather than re-investing the proceeds of sale. Mr Mills continued to make the monthly payments. None of Mrs Mills’ investments paid off and by 2014, her financial mismanagement meant she was in debt and living in rental accommodation.

Mr Mills applied to the court to reduce the amount of the periodical payments. He had remarried, had a new family, and wished to move on. He cited his ex-wife’s financial mismanagement as the reason that she was in the position she found herself and argued that she was able to increase her income by working. Mrs Mills, on the other hand, applied for the periodical payments to increase to cover the shortfall between her own income and the rental costs of her accommodation.

The judge at first instance refused to increase the periodical payments, but equally did not reduce them. Mr Mills had to continue to pay his ex-wife £1,199 per month. The Court of Appeal allowed the ex-wife’s appeal. It held that the court at first instance had not properly explained why Mr Mills should not continue to meet his ex-wife’s basic needs (including rent) through the periodic payments. The result of the Court of Appeal’s judgment was that the periodical payments were increased. Mr Mills was granted permission to appeal against this decision.

The Supreme Court’s decision in Mills v Mills

The Supreme Court has now delivered its judgment in this case and found in favour of Mr Mills in a decision that will be of interest to your London divorce solicitor. The Supreme Court considered that the Court of Appeal had been wrong to conclude that the court below had not provided sufficient reasons for the decision not to increase the periodical payments. The Supreme Court found that the judge had given a reason for his decision – that it would be unfair to expect Mr Mills to increase the periodical payments to his ex-wife in the circumstances where those needs had increased because of her own financial mismanagement in respect of the capital she had been awarded in the original divorce settlement.

In reaching its decision, the Supreme Court recognised that the court has a wide discretion under the Matrimonial Causes Act 1972 when it is dealing with an application for the variation of periodical payments, such as in this case. The court did not have to decide in favour of the husband, but it was open to it to do so.

The Supreme Court also held that there would need to be very good reasons for increasing the periodical payments in a case such as this where the ex-partner had significantly contributed to the deterioration of his or her financial situation.

The impact of Mills v Mills

The case will obviously have an impact on future applications for the variation of periodical payments, and divorce and family lawyers will take note of the judgment. It sends a message to the former partner in receipt of periodical payments that they have a responsibility to act wisely in respect of any lump sum they are awarded on divorce. The answer to financial mismanagement will not be an application for more money. Equally though, although Mr Mills was not, ultimately, required to pay any more to his ex-wife, he did not succeed in getting the periodical payments reduced. The judge at first instance had thought that Mrs Mills’ approach, securing a mortgage and investing the capital was reasonable, and that she had not been profligate or wanton. He found that Mr Mills could afford to continue to make the periodical payments at the level originally agreed.

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