In recent weeks and months, the cost of living crisis has been at the forefront of the minds of many. For some, a significant outgoing may be spousal periodical payments, sometimes referred to as spousal maintenance, to their (former) spouse. Some of these payers may be concerned about meeting this obligation in the current economic climate. Equally, there will be others in receipt of spousal periodical payments for whom these payments provide an important source of income and these recipients may now be concerned that these payments will no longer sufficiently meet their income needs.
What are spousal periodical payments?
Spousal periodical payments are regular payments (perhaps weekly or monthly) from one party to another to provide maintenance. Orders for such periodical payments are variable.
Mostyn J set out the principles the court should consider when making an order for spousal periodical payments (paragraph 46 of SS v NS [2014] EWHC 4183 (Fam)). These principles include (but are not limited to) the following:
- The court must consider a “termination of spousal maintenance with a transition to independence as soon as it is just and reasonable“, i.e. a clean break; and
- “The essential task of the judge is not merely to examine the individual items in the claimant’s income budget but also to stand back and to look at the global total and to ask if it represents a fair proportion of the respondent’s available income that should go to the support of the claimant“.
Variation of spousal periodical payments
In the event that either party wishes to vary the amount of spousal periodical payments paid or received, it remains open to the parties, in the first instance, to agree a variation between themselves, either directly or through their solicitors. However, if the parties cannot agree, either party may make an application to the court.
Pursuant to section 31(1) of the Matrimonial Causes Act (“MCA“) 1973, the court is able to vary any periodical payments order. When exercising this power, the court shall have regard to all the circumstances in this case with the first consideration being given to the welfare of any child of the family (under the age of 18) (s.31(7) MCA 1973). The court must also consider whether it would be appropriate to vary the order for spousal periodical payments so those payments are required to be made only for such further period as will be sufficient to enable the recipient of the spousal periodical payments to adjust without undue hardship to the termination of those payments (s.31(7(a)) MCA 1973).
Upon consideration of a variation application, the court shall consider a number of principles. Some of these principles have already been addressed above, for example, providing the first consideration to the welfare of any minor child and to consider the appropriateness of a clean break. Any change in circumstances is also relevant, as are the general principles of fairness and proportionality.
Case law has set out the following:
“Mr Justice Charles in the case of Cornick v Cornick (No.3) clearly stated a rule of fairness, namely just as an income fall justifies an application for downward variation, so an income rise justifies an upward variation. In neither case is the outcome bounded by the family’s standard of living immediately before the breakdown.” (paragraph 35, Hvorostovsky v Hvorostovsky [2009] EWCA Civ 791)
Any financial mismanagement of the applicant is also relevant. The respondent to a variation application is not “necessarily liable for needs created by the applicant’s financial mismanagement, extravagance or irresponsibility” (even though an applicant’s needs “are likely to be the dominant or magnetic factor” when considering a variation application) (Mills v Mills [2018] UKSC 38). In this case, the wife had been awarded capital to meet her housing need but she then entered into a “series of unwise transactions and so [developed] a need to pay rent”.
Indexation
If spousal periodical payments are index-linked, these payments will rise and fall with inflation (usually on an annual basis). Spousal periodical payments are typically linked to either the consumer prices index or retail prices index. If indexation of these payments has been ordered by the court, the spousal periodical payments will automatically vary.
Effect of cohabitation and re-marriage
Pursuant to section 28(1)(a) of the MCA 1973, where the court has made an order for spousal periodical payments, the term of this order shall not extend beyond the remarriage of the recipient of the periodical payments. Therefore, as cynical (and unromantic) as it may sound, a recipient of spousal periodical payments should evaluate the effect of the loss of spousal periodical payments on their financial situation before walking down the aisle again.
Cohabitation is not included in section 28 of the MCA 1973. Cohabitating with a new partner will not end spousal periodical payments in the same way as remarriage. However, in Fleming v Fleming [2003] EWCA Civ 1841, Lord Justice Thorpe stated:
“Nor do I think that the decision of this court in Atkinson v Atkinson calls for re-visitation … The judgment of Mr Justice Waterhouse on the point of principle is broadly expressed. His conclusion that cohabitation is not to be equated with marriage remains as sound today as it was then. Equally it seems to me that the direction that the court, in assessing the impact of cohabitation, should have regard to the overall circumstances, including financial consequences, remains the proper course to be followed. Of course in a case such as this, where the length of cohabitation is now greater than many a marriage that comes before a court for assessment, the range of discretion given to the judge enables him or her to place considerable weight on that circumstance.”
Therefore, recipients of spousal periodical payments may also wish to assess the financial implications of cohabitation before moving in with a new partner.
Conclusion
Consequently, if parties are concerned with the level of spousal periodical payments, it is possible to vary these payments. However, if the parties cannot agree a variation between themselves, either party may make an application for the court. Depending on the circumstances, the court may then vary these payments going forward to address better the parties’ circumstances.
