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Factors for an upward Variation

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Given the very difficult economic times we have been and are still in the throes of, we are often asked by clients about the effect of recession upon financial orders made following previous divorces.

There is very little that can be done to change the amount of a lump sum orders or orders in relation to property, whether made by the court or by agreement.

However by their very nature, continuing orders for periodical payments (maintenance) from one spouse to another have flexibility within them that can be varied up or down depending on changes in the respective parties circumstances. 

It has, historically over the last year or so been significant down turns in fortune that have brought cases of this nature to the public eye.  Redundancy, company failure or asset\income value deterioration have caused applications to be made to downward vary maintenance orders (launched by the payer) or conversely, recipients of orders who may have lost their own jobs or bonuses have triggered applications for upward variation of maintenance.   What does the Court consider important and relevant in these cases and in particular what is considered if one party has an upturn in income?  

The most recent case of this nature was heard by the Court of Appeal.  Hvorostovsky v Hvorostovsky [2009] EWCA Civ 791 highlighted the factors to be applied when considering the wife's application to increase her maintenance order following a significant upturn in the husband's income.

The case concerned the husband, who was a world renowned opera singer, the wife a ballerina, who by the time the parties married, had retired.  Both parties were Russian.  There were 2 children of the family.   The original maintenance award totalled £113,000 which was then increased to £117,000, approximately 30% of the husband's earnings.   Following the divorce, the husband remarried and had two further children.  His career continued to be successful and his income had increased to £1.86million per year.  Conversely, the wife had not worked again, her English had not improved significantly and she continued to care for the children (twins) who were 12 years old.  

The wife applied for an increase in maintenance.  At the first hearing, her payments were increased to £120K per year together with £25K for the children.  In addition the husband was ordered to pay school fees and extras.   The order could only be made from income that was remitted to the jurisdiction which attracted income tax (which had not been payable previously) and therefore the award cost the husband £285,000 from his income. The wife appealed.

The Court held that the payment of UK income tax together with the husband's obligations to his second family and the length of the parties marriage (12 years) were factors that the Court had rightly taken into account.  However, of little or no relevance were the arguments that the husband's career as a singer was uncertain and significant time and lapsed since the breakdown of the marriage, of that the wife had waited for 2 or 3 years before mounting her application.

In ordering a further increase to the wife to £140K plus £30K for the children, the court left the wife with some £37K over and above her stated "needs".   The Court held that fairness justifies an upward variation when income rises as much as a downward variation is justifiable if income falls, even if it means that the wife enjoys a higher standard of living then during the marriage.   "Reasonable requirements" are not a determinative or limiting factor where there is surplus income over needs.  This is the case both when proceedings continue immediately on the breakdown of the marriage, and for variation cases.

Whilst it might not be so common for there to be a surplus income, this case is relevant, particularly where the paying party has a second family.  However, it is also of interest that a delay by the applicant in making the application did not prove too detrimental to the result.   Indeed, to delay for a period of time may be useful to ensure that any increase in maintenance is a longer term situation rather than a fortunate blip.

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