Court of Appeal Deals Blow to “Joint Lives” Principle in Divorce Case
Court of Appeal Deals Blow to “Joint Lives” Principle in Divorce Case
The Court of Appeal has ruled in a divorce case that the wife of TUI travel mogul William Waggott should have her court-ordered maintenance grant of £175,000 cut short after three years.
The decision represents a significant departure from the precedent principle in divorce cases that former, financially dependent spouses should be ensured a “meal ticket for life” in legal separation.
In UK divorce law, spousal maintenance may be awarded on a “joint lives” basis, meaning that the paying party must continue to support the other for the rest of their life.
Mr. Waggott successfully argued that annual payments – in addition to a £9.76m settlement awarded to his wife by the High Court in 2014 – left his ex-wife Kim Waggott with “no financial incentive” to return to work and become more financially independent from her former spouse.
Mrs. Waggott was previously a successful accountant herself and controlled the finances of UCI cinemas before giving up her job in Manchester to support the travel company executive’s career move to London. The pair, who were married for 21 years, made a joint decision to prioritise Mr. Waggott’s career; he earned a reported £3.7m in 2014.
Mrs. Waggott had argued at the appeal hearing that Mr. Waggott’s earning capacity was a marital asset which she had co-built with him over their marriage. As such, she sought a £23,000 increase in the yearly maintenance payments.
Lord Justice Moylan however rejected this argument, ruling that the current payments should stop after three years and noting that Mrs. Waggott would not suffer “undue hardship” from the loss.
Divorce courts continue to shift away from “meal ticket for life” approach
This latest ruling marks a continuing shift in divorce case law away from traditional principles of spousal payment.
Historically, most divorce settlements involved a “joint lives” spousal maintenance order, with judges considering that (generally) women, who had committed their lives to the upkeep of the family home life, supporting the breadwinner’s work-heavy lifestyle, and raising any children, were ill-equipped and should not have to return to work or take a significant financial blow to their quality of life, simply because a previous, life-long marriage agreement of divided, complementary roles had come to an untimely end.
Now however, as modern gender roles change and more women are well-educated and enjoy high-earning careers, there is less of an argument for awarding joint life payments instead of specific term payments if necessary.
The courts are now keener to justify any maintenance payments, and as a rule consider whether a fixed term should be placed on a maintenance order, with maintenance more strictly based on the requirements of the non-earning spouse and their ability to return to financial independence.
Clean break principle leaves non-earning spouses at a disadvantage
Lord Justice Moylan recognised that:
“Long-term maintenance can be required as part of a fair outcome” and said that the phrase “meal ticket for life” – often used to refer to joint lives orders disparagingly – “can be used as an unfair trope.”
However, he added that the sharing of marital income should stop “at or within a short time of the end of the relationship”, and in cases where “undue hardship” is not caused, this should not be extended to post-separation earning, as “any [such] extension…would fundamentally undermine the court’s ability to effect a clean break”.
Some have welcomed this upholding of the clean break principle, considering that higher earning spouses are ordered to pay too dearly out of post-separation earnings. As Mr. Waggott’s legal team argued, at some point, “the meter [must] stop ticking.”
Legal commentators have noted that this judgement may go too far in redressing balance between earning and non-earning parties in divorce settlements, leaving the non-earning party at a distinct disadvantage.
Mrs. Waggott has undoubtedly been left with lower earning capacity as a result of her investment in the 21-year marriage, and in order to support herself will now have to dip into some of her capital itself rather than just income from that capital – something which Mr. Waggott will not have to do.
Amanda Melton comments:
Maintenance is always difficult to predict; when the order is being negotiated or decided upon it is often unclear what the respective parties’ circumstances will be in the medium to long term future. What is clear is that the courts are unlikely to award lifetime maintenance orders to a spouse who can work and has the ability to meet her own needs. The income generated post-separation and divorce is not available for sharing but rather to meet the needs of the non earning or lower earning spouse. Those needs will be assessed against the standard of living during the marriage but the court will also take into account that spouse’s ability to earn. Just because as a couple they decided she would not earn during the marriage does not mean she cannot earn in the future.
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