The issue of reducing spousal maintenance payments can arise when there has been no clean break financial settlement. Clean breaks are preferred by the courts for a number of reasons. Most importantly they end all financial ties between the spouses, eliminating the prospect of any future financial claims.
Overall clean break orders are seen as encouraging financial independence on both sides. However, lump sum, clean breaks are not appropriate in every case, particularly where one spouse:
- Is financially vulnerable,
- Has little or no earning capacity
- Will be unable to meet their financial needs over the long term
In such cases periodical payment orders or maintenance orders may be made. These can be for a set number of years or on a ‘joint lives’ basis until the death of either party or if the recipient remarries/enters a new civil partnership.
But what happens when the financial circumstances of the spouse responsible for paying the maintenance changes, and they are unable to meet their obligations? Can the maintenance be stopped or reduced, or can other aspects of the original order be changed? These issues arose in the case we discuss in this article, ABC v XYZ (2025).
As we will see, changing a periodical payments order is possible – but only if a ‘significant change in circumstances’ can be clearly demonstrated. Altering the original order in other ways to adapt to changing financial circumstances
is even more difficult to achieve.
ABC v XYZ (2025) – The Background
The husband, ‘ABC’, 61 and the wife ‘XYZ’, 59 had been married for more than 20 years. They separated in 2016 and finances were agreed in 2020. The case is slightly unusual in that the original consent order from 2020 involved the husband giving a financial undertaking to use his ‘best endeavours’ to pay the wife £50,000 from the family business each year.
As a backup, a ‘minimal periodical payments’ order was also made. If necessary, this could be topped up to cover any shortfall if the husband could not make all the payments due under the undertaking.
By 2025 the husband’s financial position had dramatically changed, largely because of a significant downturn in the fortunes of the family business. By way of illustration the husband said his bonus and dividend payments had reduced, from a peak of £79,500 in July 2022 to zero in 2025. His net monthly income, less tax and money taken out to make payments to the respondent, was around £1,500 per month.
Application To Reduce Maintenance
Because of this reduction in income the husband applied to be released from his financial undertaking and for the court to change the periodical, maintenance payment to around £1000 per month. The wife contested the application, arguing that no changes should be made to the original order. She argued that the payment of £50,000 from company dividends was a tax efficient structure proposed and championed by the husband at the time of the financial remedy proceedings. In her view the downturn in the company’s financial position was a short term ‘blip’, caused by substantial investment by the company in future performance and growth initiatives which were a one-off cost. Finally she confirmed that her financial needs had not changed.
Why, she argued, should she be penalised?
The Law
Having listened to arguments from both sides, the court carefully analysed the law covering changes to previously agreed maintenance orders and the position about releasing individuals from financial undertakings given in financial remedy proceedings.
The financial undertaking
The court looked first at its ability to release the husband from his financial undertaking. It’s worth pointing out that financial undertakings are made voluntarily, While they are legally binding, a court cannot force a party to commit to one, in the same way as it can require a spouse to comply with a financial order. Looking at the case of Birch v Birch from 2017, it was clear that the party seeking to be released must demonstrate that there has been a significant change of circumstances.
The periodical payments
As far as the nominal maintenance order, the court had to consider whether in all the circumstances and after having regard to any change it would be appropriate and fair to vary the order. In reaching its decision the court had to refer to the s25 factors. It was not about arguing again over any division of capital but about focusing here on the wife’s needs. It was her responsibility to prove that she did in fact have continuing financial needs and to justify her ongoing dependency on her ex-husband to meet them.
The Decision
The court found that the husband had met the Birch test of ‘significant change in circumstances’ to be released from his financial undertaking. At the same time however the judge agreed with the wife that the downturn in the husband’s family business – from where essentially all financial support was coming from – was indeed temporary.
The company’s 2024 accounts showed reasonable financial performance and resilience. The court assessed the wife’s needs at £3,500 per month – reduced to £2,900 after taking certain state benefits into account. It found the husband was capable of paying this amount and made a joint lives maintenance order for this figure.
The judge disagreed with the husband that the wife should dip into pension assets or realise some capital to meet her needs. Nor should she be required to downsize from the (large) family home.
Comment
The case shows that where there is a significant change in circumstances, it is possible to change an existing financial order. Undertakings can be discharged. And while in appropriate cases this will mean stopping maintenance altogether, that was not the case here.The judgment also demonstrates that it is rare for the original order to be changed wholesale. It may have seemed reasonable for the wife to be required to change her living arrangements. She was living in a five bedroom, three reception room home. But forcing her to downsize to decrease her costs was not considered an option by the judge.Instead the court took the view that her remaining in the former family home was one of the key principles underlying the 2020 order and this should not be interfered with unless absolutely necessary. Essentially, the judge took the wife at her word when she said it was her home, her ‘safe place’ and where she felt secure.
Finally the judge was highly critical of the costs incurred in bringing to court a relatively straightforward dispute which he said was ‘eminently capable of settlement’. To put the costs in context, they totalled £175,000 – equal to five years of the revised maintenance. How much more sensible – and financially sound – would it have been for the couple to try to negotiate their differences rather than incur this level of fees?