Director James Pirrie examines maintenance payments

Maintenance payments, periodical payments, alimony, child-support, call it what you will, those sums that fall due on a regular basis are often the most complex part of the financial arrangements that may follow divorce or separation.  What might bring them to an end now? And can an application be made by either side for them to increase or to be reduced?

Meaning A ‘variation’ or change to the level or duration of the maintenance payment order might happen:

• Automatically because it was provided for in the original order; or
• As a new order  because an application is made and the court changes the amount or duration of the earlier order (in a set of proceedings that can become, if you are not careful, as complex or expensive as the proceedings that created the original order).

Circumstances All sorts of things might have made the original order out of date or inappropriate, for example:

• Changes in the law;
• Changes in earnings, or a sudden influx of capital, eg through inheritance;
• New relationships or the end of a new relationship, which changes what everyone thought would be the recipient’s support;
• The end of the need for a nanny – or just the fact that children become more expensive as they get older; or
• Inflation (read more about the impact of inflation on maintenance here).

Terminology The application that changes the order (and the amount of the maintenance payment) is called “an application to vary” and the changed order is often called “a variation”.  It will be:

• Amount:  A different level of payment
• Duration:  And usually for a shorter (or occasionally a longer) period.

Risk vs reward For many people the costs of putting things right, where agreement can’t be reached, makes using a formal or legal process to review the maintenance payments unattractive – even when a clear case can be made out. At Family Law in Partnership we think that there are ways of reducing the costs and that more people should be recognising sooner when their orders are out of date and when they need to take steps to see the orders adjusted.

Beware….however, particular complications may apply when maintenance payments for children are concerned. All of these issues involve technical tips and traps so our general advice is to avoid going out on your own – at the very least have one session of advice to find out whether the “diy” application is right for you.

Automatic changes to the order

“Indexation”

Indexation refers to the way that courts commonly order maintenance payment awards to change.  This is usually done in a clause just after the paragraph making the “periodical payments” order itself.  Your order may have been made when inflation was low … high current inflation may mean there is a need to revisit the order because earnings have not gone up in step and the increased level of periodical payment is not affordable.

Family Law in Partnership has developed a maintenance variation calculator to help you see the impact of indexation on maintenance payment orders.

Making a new court application to vary the old order

Here you are looking at going back to court to secure a new order.

• There is uncertainty.  The court has a free hand as to what to do – it is usually NOT a case of simply identifying the changes and applying the same methodology to the problem with the new figures.
• So predicting precisely what will happen is not usually possible.
• There are costs involved in the process.  It may well be intrusive and it will take time and effort.  Sometimes the atmosphere is difficult which may make settling the case harder (and mean that it will run longer through the process, which will mean increased costs and a risk of disproportionate cost).
• The order may go up or down and so getting the best input possible as to the strength of your case is a crucial first task.

Step 1: the order

Find the original court document – “the order” – and study what parts of it remain outstanding. Usually your lawyer will have provided you with this and if not you can usually obtain a copy from the court.

Step 2: the situation at the time

You can’t ask for a variation of a maintenance payment without showing that there has been a change of circumstance so you have to be able to show what was each side’s position when the order was made.

• Where you reached agreement, without a court attendance, the court requires a “statement of information” or “form D081”. Ideally find this or again get a copy from the court.
• Where the order was made at court (for example at a final hearing or at a financial dispute resolution hearing) then putting together the jigsaw of the precise financial position may be more difficult and you may not have been equipped to answer easily the question “what did the court see the situation was at the time?”  Usually the best answers will be provided by what the judge said at the end of the case.  You will also want to have the barristers’ summaries of information that will have been submitted to the court (and again, usually you will have been given copies at the time, if not then you should try and get them from your solicitor if you had one).

• If the court gave a judgment in writing or orally (explaining the reasons for the order it was going to make) then be sure to obtain a copy of this.

Step 3: the situation now

It is obviously harder to piece together the situation now – whilst you will know your own financial situation, you will usually know less about the other party’s circumstances – but by thinking through what you do know, you are likely to get clearer advice and thus make better decisions about what to do for the best, before you have to embark on the process.

Stage 4: advice

Now you are equipped to get advice.  Going back to the barrister who helped you may be a good choice.  Others may prefer to get a new view.

At Family Law in Partnership we know that any initiative must be fully justified in terms of the scale of the likely benefits and the costs of securing them. We aim to provide an efficient and economic assessment of the prospects of success, given either by one of our directors or through arranging an early appointment with counsel.

Types of maintenance payment orders

Types of order that may be involved

• Payments between spouses
• Payments for a child ie. payments through the Child Support Agency (CSA) or Child Maintenance

Maintenance payments between spouses

• Such arrangements must end if the recipient remarries
• The original order may set out various events that will terminate the order
• Otherwise almost anything is now possible by agreement or court order.

For example:

• Payments could go up
• They might come down
• Inflation linking (“indexation”, discussed above, might be applied or disapplied)
• They might terminate at a later date, with or without a payment or a pension adjustment
• Conditions to continued receipt might be imposed

The structure might also be changed (for example, from a set sum into a banded one, with different rates over different layers of income). It may be an opportunity to put arrangements in place in case the payer dies during the payment period.

Duration

Looking at the original court order is crucial.  Common arrangements are:

• Immediate termination – the order has ended the possibility of a variation already
• “Joint lives” – there will be a duty to pay until the first spouse dies
• Delayed termination, which is of two sorts:

o   the order will end on a specific date unless an order is made to extend the arrangement beforehand.  Making an application to do so in good time will be crucial

o   an order with a prohibition on applying to extend (called a “section 28(1A) bar”) – here the order will end on that date regardless of the situation unless someone mounts the difficult case of setting the whole order aside.

Maintenance payments for a child

These arrangements are often highly technical because two organisations might be involved and the interface between them can be problematic:

• The court may have made an order
• But for most people, there is the opportunity to involve the CMS too
• And where this is done, the CMS will operate its rough-and-ready formula which will trump the court order and usually terminate it for all purposes
• Various sorts of structures may have been used in the original order to protect against that happening and leave the obligation within the court system (which may or may not work)
• The CMS usually falls away again, (roughly speaking) at the end of August after A-levels and then responsibility is passed back to the courts.
• Against this confused structure there is encouragement to reach your own agreement.

It will be crucial to establish whether there is a right to apply to the CMS as this will operate to terminate the court order after a short delay. Such rights are likely to exist where:

• The child and parents are in the UK
• A claim could be made for child benefit for the child (ie university children are excluded)
• The payer is the parent of the child (rather than a step-parent, for example.)

There are also complex rules about how long payments can last.

Factors affecting maintenance awards

Reasons why maintenance payments might go up

The payer’s:

• income might have gone up
• expenses might have reduced (for example the end of another obligation such as paying educational costs)
• household may have changed – for example a new relationship might mean that there are more resources for the household increasing what might be made available in payments

The recipient’s:

• other income may have gone down
• costs may have increased, for example time has gone by or inflation has eroded the buying power of the original order.

Reasons why payments may reduce or even terminate

The payer’s:

• income may have gone down – or might do so
• other expenses may have increased (perhaps a new family to support)

The recipient:

• Might now have other income or increased income
• Might have other assets for support (eg an inheritance or lottery win)
• Might have increased other costs, for example time has gone by or inflation has eroded the buying power of the original order.

If the court is asked to terminate an award then it can do so and at the same time award a pension share or a lump sum.  Whenever the court is asked to vary a spousal maintenance order it will assess whether to impose an immediate termination and whether the recipient could adjust to termination at a later date without undue hardship.

Even where the issue of child maintenance remains with the court, the formula of the CMS may have a strong part to play in deciding the future level of payment.

The Process

Getting the process right is crucial to unlocking the satisfactory solution.

DIY? Everyone’s circumstances are different and there is no one approach that will fit all.  Where the right solution can be reached through direct dialogue this is likely to be the preferred approach:  usually you will want to record the new arrangement formally but this can be managed more cheaply when the figures are agreed.

Supported dialogue  Mediated or collaborative approaches can provide an affordable way to go forward and often when experienced and effective lawyers are appointed on each side a realistic arrangement can be agreed without significant cost. Mediation has become sophisticated in dealing with complex financial issues, perhaps operating with the help of a financial neutral, perhaps with a part-time or retired judge or barrister parachuted in to share a view (often called (‘early neutral evaluation’) or perhaps operating in series with arbitration:

Arbitration? Where early agreement is not possible there will be the question of whether it is prohibitively expensive to take the case to court for a final decision.  At Family Law in Partnership we have built a model that relies on arbitration to streamline the process and ensure early and affordable decisions.  This can be through Family Law in Partnership acting and presenting your case to an arbitrator appointed from a select panel by you appointing one of Family Law in Partnership’s arbitrators  to assist in settling your dispute. You do not need to be represented to bring your case to an arbitrator.

Litigation Technical cases are hard to take through the court without professional support.  In some cases, it may work for us to operate in a partnership arrangement where representation is given only at crucial points in the process.  Currently it is hard to secure an order for a contribution to costs even if your case is successful, so a careful assessment will need to be made and generally only reasonably clear cases involving significant enough sums should be pursued. Do note, that the fast track process operates for such cases – so even within the court process there is a better chance of an early conclusion to any application than perhaps was possible with the earlier order.