A law firm which offers more

Call us: 0113 246 0622

Can't Pay, Won't Pay

Comments

Times are becoming increasingly difficult and every day sees the increase in companies falling into administration and more and more people being made redundant.

What happens when a husband (which is not always the case but is generally so) cannot afford to make the maintenance payments to his former wife for her benefit or for the benefit of their children?

There is a distinction to be drawn if the payments are made following a written agreement entered into directly between the parties or if the payments are under a court order.  If payments are being made pursuant to a written agreement, provided there has been a change in circumstances as a result of which the agreement has become unjust, the court has wide powers to deal with the matter.

However, in the majority of cases, once all other finances are resolved, parties like to see the finality of an order being made which encompasses all aspects of the settlement.

So what if the payer can't pay or won't pay?

If, for example, a husband has lost his job, this is a change in relevant circumstances which would enable him to make an application for variation of the maintenance.  Upon hearing his application, the Court must give first consideration to the welfare of any minor children (under 18) and subsequently all the circumstances of the case and whether it is appropriate to impose a "clean break" eg, a one off payment in lieu of ongoing maintenance payments.

The Court can consider the case afresh and does not have to start from where the first order ended.  Both parties must therefore file up to date documents setting out their respective financial positions and the Court has the power to make a variety of orders in light of the change in circumstances.

However, what is the situation whilst the payer is awaiting the hearing date?  Should the maintenance order be paid?  If it is, this shows that the payer potentially does have the means to pay it after all, and therefore undermines the case for not being able to pay.  However, if they fail to comply with the terms of the order, the payer is in contempt and will not be given any sympathy from the court. 

The question of whether payments should be made pending the determination of the hearing for a variation was considered in Laing v Laing [2007] 2 FLR and the Court found that if a payer has the ability to pay but refuses to do so, the payer will be in contempt.

The Court held (inter alia) that the key question was whether there was any other effective way to secure compliance with the order and that once the threshold for wilful non payment had been established, it was relevant to take account the level of defiance in deciding whether the application for variation should carry on at all.   Even if there was a genuine reason for seeking a downward variation of maintenance, this was not enough to legitimise wilful failure to make payments under an order where there were means to do so from current resources.

In those circumstances, steps can be taken to enforce the order to ensure full payments are made together with a payment of any arrears.

Therefore, beware, if you are in a situation where you have had a change in financial circumstances that results in you not being able to pay a maintenance order from your income, payments can and must be made from any other available source.   In addition, steps must be taken quickly to liaise with the receiving party if it appears that orders cannot be complied with.  Payments should continue on the proviso that they are only in compliance with the court order and not an indication of ability to pay on a longer term basis.    Request must be made to list the matter for a court hearing as quickly as possible. 

For a party in receipt of maintenance, the threat of redundancy of the paying party is ever real and in some cases a question of "when" rather than "if".  Consider therefore, seeking a policy of insurance in order to protect maintenance payments for the family so that in the event that a source of income is lost, the welfare of the family is protected.  Payment of premiums can be negotiated as part of the overall package of financial division of assets and something which should be considered as a matter of course in these turbulent economic times.  

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.