Company Directors have much to consider at the moment, given the immediate impact of COVID-19 and its longer-term consequences. The effects will be felt in all types of companies, from …
Divorce and maintenance orders – the end of “a meal ticket for life”
Gender equality is much in the news. In the past many felt that the main breadwinner was at times treated slightly unfavourably by the Family Courts in England and Wales, and that it was not without good reason that London was called the divorce capital of the world. However change is in the air.
The English Court of Appeal’s recent judgment in Waggott v Waggott  arguably reflects a more modern attitude towards our society, as the Court decided that a “meal ticket for life” (via a joint lives maintenance order) is no longer something that the financially weaker party can expect from the English Courts.
Mr and Mrs Waggott were married in 2000 and separated in 2012, they had one child born in 2004. When the couple began living together they were both accountants and did not have any significant assets, however during the course of the marriage the husband was very successful and their net assets grew substantially to £16.4 million. The wife gave up work shortly after they were married, and apart from a short one-off period did not work again. Mrs Waggott was originally awarded a settlement representing an equal division of their capital assets including pensions. She was awarded capital of £9.67 million and yearly maintenance of £175,000 for life. Her housing needs were held to be £2.75 million. The husband had a very high income of £3 million net per annum. Mrs Waggott appealed against the decision and returned to Court to ask for an increase in her yearly maintenance payments. The husband cross appealed against both the term and level of the wife’s maintenance.
The Court of Appeal made a number of key findings:-
- It restated that when a relationship ends each is entitled to an equal share of the assets of the partnership, and that the Court should try and achieve a clean break between the parties as soon after the divorce as is just and reasonable.
- A party’s earning capacity is not a matrimonial asset to which the sharing principle applies, and it is not the case that any future financial differences between the parties will necessarily constitute discrimination.
- It is fair in some cases for a party to use some of the capital that they have been awarded under the sharing principles to meet their own income needs, notwithstanding that the other party will be able to meet their own future ongoing needs from their earned income.
- Compensation will rarely be established when one party has given up a lucrative career. As a necessary factual foundation the Court would have to find, on the balance of probabilities, that the parties aborted career would have resulted in them having resources greater than they would have been awarded by application of either the needs or sharing principles. Thereafter the Court should separately determine whether, and if so how, that factor should be reflected in that award to ensure fairness to both parties.
- On any application to vary maintenance the Court must consider terminating the maintenance payments.
In summary if this judgment is followed in Jersey, in high net worth cases at least, the financially weaker party should not assume that they will be able to continue to share the income of their former spouse; and they may be expected to use their capital resources to generate an income and become financially independent and self sufficient within a reasonable time. If a clean break is a real possibility without causing undue hardship it should be expected. Joint lives maintenance orders are therefore likely to become increasingly rare.