There is a not so well kept secret in the legal profession. In most cases of spousal maintenance, no-one knows exactly how much spousal maintenance the Court is going to order or for how long. Case law provides no precedent for the duration of the Order and little assistance as to how much. Every case before the Court is decided on its own facts and the best any lawyer can offer is an experienced and educated guess.
As the title of this article suggests, there are two considerations. Firstly, how much? Secondly, for how long?
The reason why lawyers can only provide an educated guess is because much depends on the findings of fact by the Court. For example, how much does the particular person earn? Are they earning their full potential? How much can be paid out of a business without causing financial damage to the business? All of these are questions of fact and must be determined by the Court based on the evidence presented to the Court.
In years gone by, the Courts would often turn to generalised principles such as the “reasonable requirements” of the person receiving maintenance or what used to be referred to as the “one third rule”. The law has developed beyond those principles. The lawyer can now draw from more recently decided cases in which the following principles can be derived:
1. The Court will consider how the other party’s needs should be met and these needs will be generously assessed by the Court.
2. The other party will be compensated for any disadvantage they have suffered as a result of the marriage and its subsequent breakdown.
3. In those fortunate cases where there is a surplus of income after needs and compensation have been met, the Court will consider whether there should be a sharing of the surplus.
4. In short, the Courts are interested in achieving “fairness” as the overall guideline.
What is fair in a particular case, will depend upon the facts of that case.
Subsequent decisions have indicated that “sharing” is not relevant to a decision concerning maintenance. It is true to say that the majority of cases will be concerned with “needs” as it is common place where assets are divided upon divorce, for finances to be a difficulty when both parties are seeking to live independently in circumstances where the existing finances were used to live together. It is a matter of common sense and the foundation of the old adage that “two can live as cheap as one” that the decision of the Court should boil down to “needs”. Therefore, the principle of “sharing” is only likely to be relevant in exceptional cases where large sums of money are involved.
The Courts have tried to reach a position where clarity can be achieved by the application of simple clear guidance. This has resulted in the indication, by the Courts, that maintenance should be decided by the principle of “need” alone. However, the concept of “need” is not a fixed idea and there is room for the exercise of discretion in the assessment of those “needs”. We can say with some certainty that in the majority of cases, the overriding principle to be applied is one of “needs”. It is in the assessment of those “needs” that opinions differ and will be dependent, as mentioned previously, on the findings of fact made by the Court, such as, the level of income, what is a particular persons earning capacity etc.
How these findings of fact are to be treated by the Court is not a straight forward question. For example, what does the Court do about income where it includes discretionary bonuses? If the Court decides to base an award of maintenance based on an average annual income level, this could put the person paying maintenance in some difficulty if the discretionary bonus payment is not received in a particular financial year. The Court could decide to award a percentage of any bonus, if received, but this would involve ongoing evidence of receipt by the person paying maintenance which, based on experience, can lead to further conflict.
A very contentious issue when dealing with maintenance is the thorny issue of co-habitation. Strictly speaking, the Courts take the view that cohabitation cannot be equated with marriage. This is a particularly unpalatable view from the paying party’s perspective when it is considered that when it comes to pre-marital co-habitation, the duration of the marriage includes cohabitation moving seamlessly into marriage. This in turn affects any financial remedy, on the basis that the longer the marriage, the more entitlement there is to finances. The law justifies this approach on the basis that the recipient has no legal entitlement to financial contribution or benefit, during the course of the relationship (cohabitation) or on the breakdown of co-habitation.
An understanding of these principles and the ability to set out the evidence in a clear manner for the Court is essential. Schedules of Income and Assets are required. Whilst no-one expects such schedules to be precise on the basis that they often involve some degree of assumption, it is, nevertheless, the case that such schedules must be based in reality and must be presented to the Court in a manner which emphasises the particular arguments to be presented on behalf of a particular party.
It is the duty of the Court to consider a financial “clean break” between the parties, whenever someone makes an Application for a Financial Remedy. Therefore, the emphasis of a Court will be on making a capital adjustment and Lump Sum Orders as opposed to maintenance (periodical payments). However, this involves a balancing act, on the one hand of achieving a “clean break” and on the other, to allowing the parties to adjust to their lives apart, without undue hardship.
The Court must therefore consider the following factors:
1. Whether or not it is possible to achieve a clean break.
2. If a clean break cannot be achieved without undue hardship then the Court must consider what maintenance is to be paid.
3. The duration of any maintenance payment can only be for such term as in the opinion of the Court would be sufficient to enable the recipient to adjust without undue hardship to the ending of the financial dependence between the parties.
What is appropriate in each case will depend on all the circumstances of the case (findings of fact). The first consideration being the welfare of any minor child of the family.
The factors outlined above, require the Court to make “findings of fact”. Again, this will depend upon the particular facts of the case. It is essential that evidence is produced to the Court in a way that supports the arguments for each party. Maintenance can be ordered on a “joint lives” basis or on a fixed term with a prohibition on any extension of that term. The facts must be presented to the Court which either support the reasonable expectation that the recipient can and will become financially independent from the other party or, alternatively, presented in a way which suggests that this is not the case.
In short, how much maintenance is to be paid and for how long, is essentially a fact specific exercise and involves the Courts discretion in making those findings of fact. The preparation of Schedules of Income and Assets and the presentation of evidence to support each party’s contention in a clear manner is essential.
We therefore conclude with the reasoning that:
1. Each case will be decided on its own facts.
2. Maintenance is an area of law which involves an educated guess and good instinct.
3. Where capital and liquid assets can be divided to achieve a clean break which meets the needs of the parties, the Court is likely to order a clean break.
4. A balance needs to be achieved between needs on the one hand and achieving financial independence and self-sufficiency between the parties.
5. The ability of the paying party to meet the terms of any Order made by the Court cannot be ignored.
Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.