It’s All Relative: Spousal Maintenance
The issue of spousal maintenance is something which is divisive and cases such as Mrs Waggott’s this feed both the tabloids and the broadsheets. This includes the now ever familiar headlines of “Meal ticket for life backfire” (The Telegraph) and “£10M divorce pay-out wasn’t enough” (The Sun). With emotive headlines and eye watering sums of money involved it can sometimes be difficult to get the bottom of what actually happened and…more importantly…why.
Mr and Mrs Waggott commenced their relationship in 1991, married in 2000 and separated in 2012. There was a Final Hearing in September 2014 to resolve their financial affairs. The matrimonial “pot” in their case was c.£16.4M. They had already agreed that there should be an equal division of capital and pensions. The issue on which they could not agree was maintenance and so this was decided at a final hearing and to cut a long story short Mrs Waggott ended up with:
- £9.6M of capital;
- A pension which would provide her with a gross income at the age of 60 of c.£76,000;
- £175,000 per year spousal maintenance for life (unless she were of course to remarry);
The sums involved are significant but need to be put into context -the parties had been in a relationship for some 21 years and with Mr Waggott earning £3M-£3.7M per year at the time of the hearing. Mrs Waggott’s case in respect of maintenance was that she should receive £190,000 per year for life. A sum significantly less than 10% of his income although it has to be acknowledged that part of it was performance related bonus and therefore in no way guaranteed.
The court has a duty, under the statue, to impose where possible a “clean break”. This means that there is to be no ongoing maintenance payments between spouses. Mrs Waggott had argued that she would not be able to adjust to a cessation of her maintenance, even after a fixed period of time, without “undue hardship”. For this reason, she secured maintenance for life.
Dissatisfied with the result, Mrs Waggott appealed and off the back of this Mr Waggott issued a cross-appeal with the matter coming before the Court of Appeal in November 2017.
Mrs Waggott’s appeal had three (inter-linked) threads to it – the most prominent of which was her quantum of maintenance. She once again sought maintenance of £190,000 per year for life. Mr Waggott on the other hand sought for her maintenance to end in March 2021 with a condition that she would not be able to extend this term under any circumstances (something called a s28(1A) bar). His reason for this was that Mrs Waggott would essentially have £4.6M of “spare” capital after she had purchased a house and a holiday home and numerous other capital items. This money alone, if sensibly and relatively cautiously invested, could generate an income in excess of £100,000 per year. On top of this by 2021 Mrs Waggott would be receiving some £76,000 of pension income. It was argued by the Husband therefore that she did not require the maintenance to continue beyond this point. Mrs Waggott was of the firm opinion that she should not have to use her capital towards her income. The court disagreed.