Cohabitees- the real impact on periodical payments

Divorce & Matrimonial Finance

03 January 2024

The recent case of KG v NB [2023] EWFC 160 heard in September 2023 provides a helpful insight in to the Court’s ongoing analysis of cohabitees’ contributions and how this may impact upon periodical payments.

In this particular case, the husband sought to vary an order for periodical payments made against him in 2019 following contested financial remedy proceedings. Under the terms of the original 2019 order, the husband was ordered to pay the wife the sum of £1,500 per month until March 2027 at which time the payments would reduce to £1,250 per month payable until March 2036. It was ordered that the husband’s obligations for payments would terminate in March 2036 with a clean break and a section 28 bar preventing any extension to the term.

At the time of the 2019 order, the wife was occupying the former matrimonial home with the parties’ two children. Of note, at this time, the wife was not cohabiting. It was intended she would occupy the former matrimonial home until June 2020 at which time the property would be sold and liabilities would be met from the net proceeds. A replacement property was to be purchased supported by a joint mortgage between the parties which was to be held on trust for sale until the first of a series of triggering events. On the first of the events to occur, the property would be sold with the husband receiving 30% of the balance and wife receiving 70%.

In December 2021, the parties returned to Court and reached consent terms enabling the wife to remain in the former matrimonial home rather than it being sold. At this time, the wife was now cohabiting with her partner. The terms of the consent order were agreed on the basis her cohabitee was providing a lump sum of £271,618, reducing the mortgage secured against the property and allowing for liabilities to be met. The trust for sale was modified with the same triggering events as before but with the proceeds of sale being distributed after repayment of £271,618 to the wife’s cohabitee. The maintenance terms were not varied.

In April 2022, the husband applied to reduce the periodical payments immediately to £625 per month (to be backdated) with the payment term to come to an end in three years’ time rather than the anticipated end date in 2036. This was something he had raised in correspondence as early as April 2021 but had not formed part of the consent order entered in to later that year.

It was argued by the husband that the variation should be ordered on the basis of the wife’s relationship with her cohabitee and his assertion that the wife’s earning capacity was greater than at the time of the 2019 order. As part of her argument, the wife suggested that the presence of her cohabitee was not a change in circumstances as the husband had been aware of his presence in the household when the further order was made by consent in 2021.

In this instance, the following matters were identified as key issues for the Court to consider:

  • When considering a change of circumstances is the Court required to view this from the perspective of the 2019 or 2021 order?
  • Does the respondent have an improved earning capacity when compared to the date of the consent order and if so, can the Court quantify this and how, if at all, should this affect the maintenance award?
  • To what extent should the maintenance award be recalculated in the light of the role of the cohabitee and having regard to his resources? Can he or should he contribute more to the family economy? What impact, if any, should this have on the maintenance award?
  • Taking a longer-term view can the Court assess a future time when the maintenance needs will further change? In particular to what extent can the Court predict the likely circumstances when the property comes to be sold in the summer of 2026?
  • The ability of the applicant to meet the existing maintenance award?

In judgement, HHJ Willans found that the husband was able to argue a change of circumstances arising out of the cohabitation notwithstanding the 2021 order. The issue of cohabitation was noted to be a “dynamic rather than static in character” with potential relevance changing over time. As such, the Court was able to property evaluate the relevance of the wife’s cohabitee and the contributions he was and is able to make to the household. The Court went on to conclude that it would not be fair or reasonable to impose on the cohabitee an expectation of working more to fund this domestic economy; this was not a case in which the cohabitee was not financially contributing (his contribution in to the household estimated to be in the region of £1,000 per calendar month in addition to the lump sum he had paid).

HHJ Willans further noted the Court would have regard to all the circumstances including any changes in the circumstances to which the Court would originally have had regard. When analysing the wife’s cohabitee’s financial contributions, this was weighed against a cost of living crisis and the fact that a cohabitee will often incur consequential costs too (such as food and utilities). Taking in to account all the circumstances, the Court concluded that the maintenance paid by the husband should remain at the current level until 2026 at which time there would be a stepped reducing until the term came to an end in 2036 with a section 28(1A bar).

It is not uncommon for the paying party to consider an application to vary periodical payments when discovering the receiving party is now cohabiting. However, the Court’s careful analysis of the wife’s cohabitee in the case of KG v NB [2023] EWFC 160 is a perfect example of the ongoing impact of the cost of living crisis on households and how this ultimately trickles through to financial remedy proceedings. It is no longer the case that the presence of a cohabitee alone is sufficient to establish that the recipient is now financially more secure compared to the time at which the order was first made. In this case, notwithstanding the cohabitee’s financial contribution, rising mortgage costs and consequential costs left the wife in a similar financial position to that initially anticipated by the Court. It is imperative that litigants and practitioners alike go beyond the rudimentary approach in considering a change in circumstances and consider the real day to day impact of the change.

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