Variation of Maintenance

Variation and Discharge of Orders for Financial Provision

An application to vary maintenance is made pursuant to section 11 of the Matrimonial Proceedings and Property Ordinance (Cap 192) which, inter alia, provides that:

section 11(1) – Where the court has made an order to which this section applies, then, subject to the provisions of this section, the court shall have power to vary or discharge the order or to suspend any provision thereof temporarily and to revive the operation of any provision so suspended.

and

Section 11(7)  – In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, including 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 …

Section 11(1) of the Matrimonial Proceedings and Property Ordinance Cap.192 (“MPPO”) gives the power to the court to vary or discharge the orders made under the following provisions (by way of a checklist only) of the MPPO or to suspend any provision thereof temporarily and to receive the operation of any provision so suspended:-

  1. Maintenance pending suit- section 3
  2. Unsecured periodical payments to the other party- section 4
  3. Secured periodical payments to other party- section 4(1)(b)
  4. Lump sum payment to be paid by instalments to the other party section 4(2)(b)
  5. Unsecured periodic payments to the child of the family- section 5(2)(a)
  6. Secured periodic payments to the child of the family- section 5(2)(b)
  7. Lump sum payment to be paid by instalments to the child of the family- section 5(4)
  8. Settlement of property orders made on or after granting a decree of judicial separation in favour of the other party and/or the child- section 6(1)(b)
  9. Variation of settlement orders made on or after granting a decree of judicial separation in favour of the other party and/or the child- section 6(1)(c)
  10. Extinguishing or reducing of settlement orders made on or after granting a decree of judicial separation in favour of the other party- section 6(1)(d)
  11. Sale of property orders- section 6A

The following maintenance orders made in favour of a party to the marriage and/or the child of the family on the ground of wilful neglect under section 8:

  1. Interim periodic payments for the party and/or the child of the family- section 8(5)
  2. Unsecured periodical payments for the party- section 8(6)(a)
  3. Secured periodical payments for the party- section 8(6)(b)
  4. Unsecured periodical payments for the child of the family- section 8(6)(d)
  5. Secured periodical payments for the child of the family- section 8(6)(e)
  6. Lump sum payment to be paid by instalments- section 8(7)(b)

In short, whether the court orders are made by consent or after a contested hearing, any income order, which is variable, can be varied as opposed to a capital order which is final and cannot be varied.

However, the following points should be noted:

Where a lump sum order is to be paid by instalments, although the total amount cannot be changed, the amount and the frequency of the instalments can be varied. If the lump sum payment is secured, the amount of security can be reduced after some payments have been made (i.e. by virtue of section 11(2)(b)(c) and (e), orders made under section 4(2)(b), 5(4) and 8(7)(b) can be varied).

In Clarke v Clarke (1983) HKC 602, the Hong Kong District Court has gone so far as to decide that ss.11(1) and (2) of the MPPO provide the jurisdiction to the court to discharge payment of the balance of the lump sum which was to be effected by instalments.

Any order made on or after granting of a decree of judicial separation for the settlements of property and variation of settlements can only be varied on an application made in proceedings for the rescission of the decree of the judicial separation or the dissolution of the marriage of the parties (see section 11(4))

On an application for variation of any secured and/or unsecured periodical payments made to the other party and/or the child of the family, the court has no power to make any order for transfer of property, settlement of property or variation of settlement (see section 11(5))

On an application for variation, there is no power for the court to make any order for lump sum payment in substitution to an order for secured and/or unsecured periodical payments in favour of a party in divorce of a party in divorce proceedings and the applicant in an application for maintenance on the ground of wilful neglect under section

However, there is no such restriction to make an order for lump sum payments in substitution to an order for the periodical payments in favour of the child of the family in such proceedings (see section 11(5))

In the application for variation, there is no jurisdiction for the court to deal with arrears of maintenance under section 11.

Who can apply for the variation?

  1. The payer
  2. The payee
  3. The personal representatives of the payer, where the payer under a secured periodical payment order died. However, no such application shall, except with the permission of the court, be made after the end of the period of six months from the date on which representation in regard to the estate of that person is first taken out (see section 11(7))

What is the basis for the court to exercise the power to vary an order?

In exercising the powers to vary any orders conferred by section 11(1) the court shall have regard to all the circumstances of the case, including 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.

Thus, it is necessary to look back to those factors as set out in section 7 of the MPPO. If the payer has died, the court shall have regard to the changed circumstances resulting from his or her death.

NKY v CTY FCJA 2208/2009 – 25th October 2012 Per HHJ Melloy

In considering a change of circumstances, the court may look at a case de novo and is not necessarily fettered by the existence of a previous order. It may look at the situation afresh and make an order based on the parties’ existing financial circumstances. (See Ch 3.131 Jackson’s Matrimonial Finance and Taxation, 7th edition). There would normally be a reason for the application to vary or what some might call a “trigger”.

The court has a very wide power, including a power to terminate payments and to backdate the variation ordered. The overall objective is to achieve a fair outcome (see M v M, FCMC 4070 of 1990, dated 12 May 2006, unreported). The correct approach was recently summarized by the Court of Appeal in AEM v VFM [2008] HKFLR 106. In that case the Hon Cheung JA made the following point when setting out the law. Referring in particular to agreements reached by consent he said:

‘At the same time the basis and intended effect of the original order are relevant factors to which the Court on variation should pay regard and there should not be a radical departure from the approach taken by the parties themselves when they had entered into an agreement embodied in a consent order: Boylan v. Boylan [1988] FLR 282.’

AEM v VEM CACV 216/2011 (28th January 2013)

‘It is said by the husband that the parties have now been divorced longer than they were married and maintenance has now been paid for longer than the parties were married.  This may be so, but in order to justify a substantial downward adjustment of the periodical payment on account of change of circumstances, the Court should look not only at the wife’s position but also at the husband’s position as well.’

Mills v Mills [2017] EWCA Civ 129. (This case appears to remain unreported – please let me know if anyone can find it?  However, leave was granted on 8th August 2017 for Appeal, in part, to UK Supreme Court – watch this space).

“The judicial winds have increasingly, over recent years, been blowing in favour of fixed term maintenance orders with the result that many joint lives’ maintenance orders have returned to the courts as the subject of variation applications not only in relation to quantum but also duration. However, in Mills v Mills [2017] EWCA Civ 129 the Court of Appeal seemingly bucked the trend and not only refused to limit the duration of the maintenance order but also increased the monthly amount payable.

Facts

Mr and Mrs Mills divorced in 2002, following a 13 year marriage, and reached an agreement as to the settlement of their respective financial claims. Mr Mills agreed to pay Mrs Mills the majority of the liquid capital from the marriage, comprising a lump sum of £230,000, together with spousal maintenance of £1,100 per month on a joint lives basis (i.e. until she remarried, one party died or until further order of the court) and child maintenance of £300 per month for the benefit of their only son until he reached the age of 18 or finished tertiary education.

12 years later, in 2014, Mr Mills applied to vary the part of the order relating to spousal maintenance. Specifically he sought to reduce the level of payments and to change it from a joint lives’ order to a fixed term order (i.e. establish an end date for payments). Meanwhile, Mrs Mills cross-applied for an increase in the quantum of monthly spousal periodical payments because she claimed her needs were not met at the current level of maintenance. (Both parties also applied for capitalisation of the maintenance orders they were seeking.)

After the judge dismissed both applications, and left the original spousal maintenance order unaltered both as to duration and quantum, both parties went on to apply for permission to appeal.

Appeal

Mr Mills’ application for permission to appeal was refused on paper and, even though he attempted to renew his appeal for various reasons (including that guidance was required from the Court of Appeal as to the test to be applied for making a fixed term order), he remained unsuccessful in obtaining permission. Specifically the Court of Appeal disagreed that guidance was required, as they considered the current law was clear, namely that an application for a fixed term order is to be determined by needs.

However, Mrs Mills was granted permission to appeal but only on the ground that the judge’s refusal to increase her maintenance left her unable to meet her basic needs.

The judge at first instance fixed Mrs Mills net income after tax at £1,541 per month and her basic needs at £2,982 per month, leaving a shortfall of £1,441. However, he ordered that spousal maintenance should remain at the same rate of £1,100 per month thereby leaving Mrs Mills short of £341 per month.

Mr Mills contended that Mrs Mills had already received the lion share of the capital on divorce which she had lost as a result of a gross mismanagement of her finances, and that his maintenance obligation had already extended beyond the length of the marriage. Moreover, in the absence of a term order of more than a couple of years, maintenance would continue beyond the tertiary education of the parties’ son. Mr Mills felt that he should be allowed to move on with his life 15 years after the parties’ divorce.

Mrs Mills denied deliberate financial mismanagement. She claimed that she had been unable to rehouse mortgage free in the area nearby their son’s school and due to a number of health issues requiring surgery, her income had been affected and she had taken on borrowing, which she could not repay.

The judge at first instance noted that the wife had unwisely invested in a series of properties, each time moving upmarket with an increased mortgage with the eventual consequence that she exhausted her capital. However, he made no findings of financial mismanagement and said that she had not been “wanton or profligate”. He concluded that the wife would not be able to move to independence, i.e. adjust her expenditure to live within her means.

The Court of Appeal found that the judge at first instance had made an error in principle in deciding that Mrs Mills could not meet her needs but that she would have to adjust her expenditure to reduce those needs, particularly in the light of the fact that the husband could afford to pay increased spousal maintenance whilst supporting his new family. The judge at first instance had failed to (i) justify why he had ordered the status quo of £1,100 to continue, (ii) provide an explanation of how Mrs Mills could meet her basic needs and (iii) explain why she should have to live below the budget that he had accepted.

Consequently, Mrs Mills appeal was allowed and the Court of Appeal ordered that the spousal maintenance be increased to £1,331 per month to meet the deficit of £341 for Mrs Mills’ basic needs.

Conclusion

At first glance, this Court of Appeal decision appears somewhat surprising in the light of recent case law which has increasingly seen the courts encourage parties to move towards financial independence by limiting the number of years for which spousal maintenance is payable. However, spousal maintenance is a complex area of law and the ‘rules’ vary considerably from case to case. Although this case may be the exception to the recent trend of decisions, it emphasises the wide discretion available to the court.

“This case reaffirms the court’s approach that marriage is a financial responsibility that endures post-divorce and is a clear example of how spousal maintenance can still be varied, both upwards and downwards, many years after the divorce and financial settlement.

Ultimately, we are reminded that spousal maintenance will be assessed by reference to parties’ needs, which trumps all other factors.””

Source – https://www.stewartslaw.com/news/variation-joint-lives-maintenance-order-court-appeal-stands-firm-mills-v-mills/