The end of the ‘meal ticket’ for life?

The Court of Appeal’s decision in the case of Waggott v Waggott is a warning to any party who is considering appealing a decision relating to maintenance.

This case highlights the risks associated with litigation and how appealing a court’s decision may backfire, leaving you in a worse situation than the original order.

In this case the husband and wife had been together for 21 years before separating; 9 years as cohabitees and the remaining 12 years as husband and wife. They have one child who is now 13/14 years of age.

As a result of their separation, it was necessary for the court to determine the appropriate financial settlement as they were unable to reach an agreement with particular regard to maintenance; this issue being one of the most complex areas in divorce.

This is not an average case; at the time of the original order, the capital pot was in the region of £16 million and the husband’s gross annual income was approximately £3.7 million. The wife was awarded a total capital settlement of £9.76 million and annual maintenance from the husband for the rest her life at such level to ensure she had £175,000 each year also taking into account any other income she receives.

Unhappy with the financial award, the wife appealed the court’s decision seeking a greater share of the husband’s income to provide her with 35% of the husband’s net bonuses until 2022 and maintenance at the rate of £190,000 per year for the rest of her life. The wife also took issue with the court’s approach in respect of her leftover capital after she bought a house and using monies to contribute to her own pension, and ascribing an income from it to be used towards her income needs. The wife’s argument was that this approach was unfair when the husband can meet his needs from his earned income.

The husband cross appealed on the basis that more weight should have been placed upon achieving a financial clean break and sought an order that he only pay maintenance until 2021, at which time such payments should automatically cease.

The Court of Appeal rejected the wife’s application and allowed the husband’s appeal. The result of this was that the wife’s maintenance payments from the husband remained at the same level and would stop in March 2021 with no possibility of being extended.

The court was of the view that, unlike capital, the “sharing principle” does not apply to an earning capacity and the wife would be able to adjust to the termination of maintenance without suffering “undue hardship”. The wife had the ability to invest the remaining capital from her lump sum and could live off the interest to produce an income. The court also commented that even if there was a shortfall the wife could obtain employment to meet the deficit.

In addition to demonstrating the uncertainty of litigation, this case is a clear indicator of the court’s changing approach to maintenance. If the issue of maintenance is left to be determined by the court, the outcome is now likely to be less generous than in previous years.

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