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18 October 2017

Consent Orders – The financial side of divorce

Getting divorced can be a stressful time and is often regarded as one of the most difficult things that a person may have to deal with in their lives, along with the death of a loved one and moving house.

With the age of the internet firmly embedded in our everyday lives, there is now a lot of information available to help people through the process. The divorce process itself follows a set of stages, which need to be completed and there is a form to be completed at each stage. Whilst the facts used in each divorce can be different, the process is largely the same. Because of this, there has been an increase in people handling their own divorce.

On the face of it, the forms look reasonably straightforward and in the majority of cases, no problems are encountered. However, an important point that people are all too commonly unaware of is that obtaining the decree absolute (the legal document which formally ends the marriage) does NOT end any financial claims that can be made by one party against the other. Even though the Decree Absolute has been granted, financial claims, if not tied off at the same time, can remain open and this can be for many years. People are often oblivious to this and think that they are moving on with their lives, believing that they have put the past behind them, including any come backs in respect of the finances. Simply put, they have not.

All too commonly, those that have handled their own divorces later seek legal advice because the other party has decided, sometimes years later, to make a financial claim, as there is no time limit to such a claim being made. Undoubtedly, assets have increased since the divorce and new assets have been acquired. Pensions, which are regarded as an asset in financial proceedings, have increased. The problem, in these cases, is that current information and values are required by the court when having to deal with financial claims. As a consequence, there is argument as to post-divorce increase in assets and whether this should be ring fenced and so not available to the claiming party. Frankly, it can all become very involved, time consuming and costly.

A recent and very high profile case that has involved a financial claim being made many years after the divorce is that of Kathleen Wyatt and Dale Vince. The couple married in 1981, had one child together (now an adult) and Miss Wyatt also had a daughter from a previous relationship, who Mr Vince treated as a child of the family. The couple’s living arrangements were that of what the court described as “new age travellers”, without assets or steady income. The parties separated in 1984 and it is believed divorced in 1992, although very little documentation survived. No financial order was made as part of the divorce. This meant that their respective claims against each other remained open, as neither had remarried.

After the divorce, Mr Vince went on to found Ecotricity, the renewable energy firm and generated significant wealth. His personal wealth is now estimated to be £100 million, according to the reports.

In 2011, some 19 years after the divorce, Miss Wyatt made an application for the court to determine her financial entitlement against Mr Vince, claiming £1.9 million, part of which she said should reflect the maintenance payments that Mr Vince might have been ordered to pay once he had started to make money, if she had ever applied for them.

Mr Vince applied to the court for Miss Wyatt’s application to be thrown out, given the amount of time that had passed since their divorce. The High Court rejected his application and so he appealed to the Court of Appeal, who overturned the decision of the High Court and so agreed that Miss Wyatt’s claims should be dismissed. Miss Wyatt then appealed to the Supreme Court and in March 2015, the Supreme Court ruled in favour of Miss Wyatt and has returned the case to the Family Court, so that her financial claims can be considered. The court ruled that the lapse in time should not prevent her from making that claim but indicated that Miss Wyatt’s claim would be difficult, given the length of the marriage, her delay in raising it and the fact that Mr Vince did not begin to create his current wealth until many years after the breakdown of the marriage. However, Miss Wyatt’s ongoing care for the children of the marriage, without any financial contribution from Mr Vince, “may prove to be much more powerful” in the Family Courts. The court also indicated that Miss Wyatt is likely to receive a comparatively small award, in the context of Mr Vince’s wealth and certainly not the £1.9 million she was claiming.

The actual award is still yet to be determined but it is quite likely that an order of some description will be made.

The case is important, as it highlights that parties should reach a financial settlement following the granting of the divorce, if not at the same time, rather than having the risk of a claim popping up at any time in the future. Not everyone will go on to make a multi-million pound fortune but circumstances do change – promotion; increase in pension values; receipt of inheritance; a lottery win – and getting a financial settlement resolved as part of the divorce may prevent claims being made many years later, on the basis of that later acquired wealth.

The decision is significant for couples of whatever age, even young couples after a short marriage, where there may not be many assets. Young couples in this situation often do not think it is necessary to reach a financial settlement at the same time as the divorce. Now they need to think twice as much as other couples with more assets.

For further information about this, or any other family related matter, please contact the family team at Steeles Law.

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