Mills v Mills

JurisdictionEngland & Wales
JudgeLady Hale,Lord Carnwath,Lord Hodge,Lord Hughes,Lord Wilson
Judgment Date18 July 2018
Neutral Citation[2018] UKSC 38
CourtSupreme Court
Date18 July 2018

[2018] UKSC 38

Supreme Court

Trinity Term

On appeal from: [2017] EWCA Civ 129

before

Lady Hale, President

Lord Wilson

Lord Carnwath

Lord Hughes

Lord Hodge

Mills
(Appellant)
and
Mills
(Respondent)

Appellant

Philip Cayford QC

Sassa-Ann Amaouche

(Instructed by Lodders Solicitors LLP)

Respondent

Frank Feehan QC

Katherine Dunseath

(Instructed by Osbornes Solicitors LLP)

Heard on 6 June 2018

Lord Wilson

(with whom Lady Hale, Lord Carnwath, Lord HughesandLord Hodgeagree)

1

In circumstances in which at the time of a divorce a spouse, say a wife, is awarded capital which enables her to purchase a home but later she exhausts the capital by entry into a series of unwise transactions and so develops a need to pay rent, is the court entitled to decline to increase the order for the husband to make periodical payments to her so as to fund payment of all (or perhaps even any) of her rent even if he could afford to do so?

2

Mr Mills (whom it will be convenient to describe as “the husband” notwithstanding his divorce from Mrs Mills, “the wife”, in 2002) appeals against an order for upwards variation of an order for periodical payments against him in favour of the wife. The order for variation was made by the Court of Appeal (Longmore LJ and Sir Ernest Ryder, Senior President of Tribunals) on 1 February 2017: [2017] EWCA Civ 129. By that order, the Court of Appeal allowed the wife's appeal against the dismissal of her application to vary the order for periodical payments by Judge Everall QC (“the judge”) in the Central Family Court in London on 9 June 2015.

3

The husband and wife are each aged 52. They were married in 1987. The wife is a qualified beauty therapist. In the early years of the marriage she worked, self-employed, in that capacity. The husband built up a surveying business within two companies which he and the wife owned in equal shares. They had one child, a son, now adult. In 1996 the wife unfortunately suffered a late miscarriage, which precipitated a long period of painful gynaecological difficulties for her. In 2000 the husband left the home in Guildford.

4

On 7 June 2002, in the ensuing divorce proceedings, financial issues were resolved within a consent order. In addition to provision for their son, who was to continue to make his home with the wife and have contact with the husband, the order provided that:

i) the home, vested in the joint names of the parties, should be sold;

ii) its net proceeds should be divided in accordance with a formula which in the event yielded £230,000 for the wife in settlement of all her capital claims against the husband and £23,000 for him;

iii) the wife should transfer to the husband her interest in policies worth £23,000 and her shares in the surveying companies; and

iv) the husband should make periodical payments to her at the annual rate of £13,200 (not index-linked) on the open-ended basis, namely during their joint lives until her remarriage or further order in the interim.

The wife therefore received the vast preponderance of the parties' liquid capital. The value of the two companies was not identified.

5

At the time of making the consent order the wife had represented that ill-health was disabling her from working and that she would need £350,000 with which to purchase a suitable home for herself and their son. The husband had conceded that she then had no capacity to raise a mortgage but had suggested, by contrast, that she could purchase a suitable home for £230,000 or less, in other words free of mortgage. In the event, later in 2002, she proceeded to purchase a house in Weybridge for £345,000 by deploying in effect her entire share of the proceeds of the home and by raising the balance of £125,000 on mortgage.

6

When he learnt of the wife's purchase, the husband, by solicitors, expressed surprise at its high cost and concern about her ability to service a mortgage, let alone one of such size. By solicitors, she replied only that she had not been able to secure reasonably priced accommodation in an area in which it would in her opinion be best for their son to grow up.

7

It is clear that, by the time of her purchase of the house in Weybridge, the wife had begun to work again as a beauty therapist, but part-time.

8

In 2006 the wife sold the house in Weybridge at the price for which she had bought it, namely £345,000. But the sum owing on mortgage had risen by £93,000 to £218,000. Having received written and oral evidence from the wife, the judge found that she had been unable satisfactorily to explain why the sum owing had increased or in what way the increase had been spent.

9

Upon the sale of the house in Weybridge the wife bought a flat in Wimbledon for £323,000, with a deposit of £48,000 and a mortgage of £275,000. The judge therefore calculated that, net of collateral costs of the transactions, about £62,000 of the proceeds of sale had not been used in the purchase of the flat; but he noted that the wife had refurbished it to some extent.

10

In 2007 the wife sold the flat in Wimbledon for £435,000. The sum then owing on mortgage had risen only marginally, namely to £277,000. Instead she bought a flat in Battersea for £520,000, with a deposit of £78,000 and a mortgage of £442,000. The judge therefore calculated that, net of the collateral costs, about £44,000 of the proceeds of sale had not been used in the purchase of the second flat. It is unclear from his judgment how the wife was able to secure, and then to service, a borrowing as high as £442,000.

11

In 2009 the wife sold the flat in Battersea for £580,000 and began to rent accommodation. The judge calculated that, after repaying the mortgage of £442,000 and meeting the collateral costs, the wife received about £120,000 from the proceeds of sale.

12

Between 2009 and 2015 the wife rented six successive properties in London and Surrey.

13

By April 2015, when the judge heard the case, the wife had no capital. On the contrary, she had overdrafts of £4,000, credit card liabilities of £18,000 and a tax liability of about £20,000.

14

Before the judge were cross-applications. The husband had applied for discharge of the order for periodical payments on his payment to the wife of a modest capital sum, say of £26,000; or for a fixed period to be set on her continued receipt of periodical payments and/or for a downwards variation of their amount. The wife had cross-applied for an upwards variation of their amount. Both applications were made under section 31(1) of the Matrimonial Causes Act 1973 (“the Act”). Section 31(7) provides:

“In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, … [which] shall include any change in any of the matters to which the court was required to have regard when making the order to which the application relates, and

(a) in the case of a periodical payments … order made on or after the grant of a decree of divorce …, the court shall consider whether in all the circumstances and after having regard to any such change it would be appropriate to vary the order so that payments under the order are required to be made … only for such further period as will in the opinion of the court be sufficient … to enable the party in whose favour the order was made to adjust without undue hardship to the termination of those payments;

…”

The “matters to which the court was required to have regard when making the order” in 2002, even though it was made by consent, were those set out in section 25(2) of the Act.

15

In his judgment, which was reserved, the judge described the wife's oral evidence as not fully satisfactory. He explained that she had been unable to give him a clear picture of her financial circumstances in the years since 2002; that, apart from her failure to explain the dramatic increase in the size of the mortgage on the house in Weybridge, she had been unable to identify the size of her income from her part-time work in the earlier years, first as a beauty therapist and then for an estate agent. He accepted that between 2004 and 2010 she had undergone no less than seven surgical procedures referable to her gynaecological difficulties and that they had affected her earning capacity at that time. He found, however, that she had exaggerated the continuing impact, five years later, of those difficulties upon her earning capacity. In 2010 she had reverted to work as a beauty therapist. Her accounts for the last available year, namely to April 2014, disclosed an annual income net of tax of about £18,500. She had then been working about three days each week. The judge rejected her contention that ill-health precluded her from working for a fourth day but accepted that she might not be able to attract the extra clients to occupy it. He therefore ascribed to her annual net earnings of only £18,500. The husband contends that it was a somewhat conservative figure; but it is appropriate for an appellate court to adopt it without qualification.

16

The judge found that the husband, by contrast, gave reliable and truthful evidence in all respects. He had remarried and was living with his second wife, their nine-year-old son and an adult step-daughter in a house in Guildford in which, subject to a substantial mortgage, he had a half interest. As in 2002 he had little liquid capital. The judge studied his earned income from the surveying companies. They had suffered a reverse in 2012 but had slowly recovered since then and, as the husband frankly conceded at the hearing, they were likely to be thriving by 2025. The judge ascribed to the husband an existing net annual income of £55,000 inclusive of a small salary which one of the companies chose to pay to his current wife. It may again have been a somewhat conservative figure; but it is again appropriate for an appellate court to adopt it without qualification.

17...

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