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Divorcee Pays Price for Unwise Financial Choices – Supreme Court Ruling

Dependent spouses are entitled to have their reasonable financial needs met if their marriages end in divorce – but what happens if those needs are increased by their own unwise investment choices? The Supreme Court addressed that issue in an important test case.

Following the end of a 15-year marriage, a divorce settlement was agreed whereby the husband paid the wife a £230,000 capital sum in the reasonable expectation that she would use the money to buy a new home for herself and their son. He also agreed to pay her maintenance of £13,200 a year.

During the following seven years, the wife bought a succession of properties and borrowed increasing sums of money by way of mortgage. After dispersing the whole of the capital sum, she was left £42,000 in debt and was constrained to move into rented accommodation. In those circumstances, she applied to a judge for an increase in her maintenance payments.

The judge found that the wife had not been profligate and that there was a shortfall of £4,092 between her needs and the amount of her maintenance. In refusing her application, however, he noted that she had not managed her finances wisely and that her needs had been increased by the choices she had made.

It would be unfair to increase the husband’s 60 per cent contribution to her rent and she would have to adjust her expenditure to make good the shortfall. The judge’s ruling was, however, subsequently overturned by the Court of Appeal and the husband’s maintenance payments were increased to £17,292 a year.

In upholding the husband’s appeal against the Court of Appeal’s decision, the Supreme Court agreed with the judge that it would be unfair to require the husband to meet the wife’s increased financial needs in full. That increase, and in particular her need to pay rent, was not of his making and to require him to augment his maintenance payments would amount to duplication of the provision that he had already made for his ex-wife.



 
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