UK: Financial Remedy – Why Not To Throw Caution To The Wind

Last Updated: 16 May 2016
Article by Ronald Fletcher Baker LLP

Our Family law solicitors based in our London City and West End explore the implications for financial arrangements arising out of divorce proceedings following the Supreme Court decision in Wyatt v Vince 2015 UKSC 14.

In this case the Supreme Court allowed an ex-wife to bring a claim against her ex-husband 22 years after being divorced. The couple were penniless at the time but years later Mr Vince made a fortune in the renewable energy business while Ms Wyatt and the children endured a life on the bread line. At the time of the divorce their financial arrangements had not been settled by a court order, giving Ms Wyatt the prospect of a claim years later.

Ms Wyatt still faces an uphill struggle in making her claim, and is unlikely to receive anywhere near the 1.9 million pounds she asked for, but Mr Vince still has to face the claim and incur huge costs in doing so. The case highlights the importance of putting in place legally binding financial settlements at the time of divorce, even if it appears then that there are no assets to speak of. Parties are then enabled to move on without fear of claims in later life.

We look at some of the legal issues in more detail in the analysis below. It is strongly advisable that if you have been though the process of a divorce in the past and do not have financial order (usually called a "consent order") you review the position in light of this development.

Analysis of Wyatt v Vince UKSC 14

Background

The Supreme Court considered this appeal made by Ms Wyatt against her former husband Mr Vince, who is now a multi-millionaire.

Ms Wyatt and Mr Vince met and married in 1981 and had one child together Dane, now aged 31. Mr Vince also treated Ms Wyatt's daughter Emily from a previous relationship as a child of their family. The parties separated in 1984 and were eventually divorced in 1992. After the divorce Ms Wyatt subsisted on state benefits or when her health allowed, on wages earned during periods of low paid employment. She also went on to have two more children. The three adult children who resided with her could only make modest financial contributions to the running of the house and they were living in a local authority property in Monmouth which had fallen into disrepair.

In contrast, Mr Vince spent a few years after the divorce living as a new-age traveller and developing his long standing interest in green energy. In 1996 he installed his first wind turbine and formed the company 'Ecotricity Group Ltd'. This company now provides green electricity throughout the UK to at least 70,000 homes and businesses and is estimated to be worth £57m.

In 2011 Ms Wyatt applied to the court for financial relief from her former husband. She applied for a lump sum payment of £1.9 million and interim payments to fund her legal costs.

It was accepted by the court that the original court file from 1992 had been lost and that no order for financial remedy had been made. It was also accepted that Ms Wyatt was in poor health.

In response Mr Vince applied to have her claim struck out on the basis that her case had no merit, was unreasonable and an abuse of legal process. In contrast to the Civil Procedure Rules, the Family Procedure Rules did not have a provision for summary judgment.

The High Court dismissed Mr Vince's application and accepted that he had not provided adequate child support for his son, or maintenance for Ms Wyatt. On occasion he had given her £200 per month and had provided her with some second hand cars. The High Court awarded Ms Wyatt an interim costs allowance payment of £31,250 per month for four months. Mr Vince then appealed this decision to the Court of Appeal who struck out Ms Wyatt's application and ordered her to repay part of the money received. Ms Wyatt then appealed this decision to the Supreme Court, the highest court of England & Wales.

The Legal Issues

On the legal issues and in particular the strike out application on the basis that the application did not have a reasonable prospect of success, the Supreme Court carefully considered the Family Procedure rules against its parent being the Civil Procedure Rules. At paragraph 19 Lord Wilson summarised the position as follows:

"...The family rules came into force on 6 April 2011 and, prior to the decision of the Court of Appeal in the present case, there was no reported authority on the construction of Rule 4.4. So far as is material, the rule, which does not apply to proceedings in relation to children, provides:

"(1) ...the court may strike out a statement of case if it appears to the court –

  1. that the statement of case discloses no reasonable grounds for bringing or defending the application;
  2. that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings ..."

In considering the construction of the words "no reasonable grounds" and "abuse of the court's process" , the Court relied on Practice direction 4A which provided that:

"2.1 The following are examples of cases where the court may conclude that an application falls within rule 4.4(1)(a) –

  1. those which set out no facts indicating what the application is about;
  2. those which are incoherent and make no sense;
  3. those which contain a coherent set of facts but those facts, even if true, do not disclose any legally recognisable application against the respondent.

2.2 An application may fall within rule 4.4(1)(b) where it cannot be justified, for example because it is frivolous, scurrilous or obviously ill-founded."

The test for striking out a claim under 4.4 was not analogous to the summary judgment test in the civil jurisdiction. Jackson LJ was wrong "to insinuate into the concept of abuse of process in Rule 4.4(1)(b) of the family rules an application for a financial order which has no real prospect of success". Its omission from the family procedure rules was deliberate.

Further the meticulous duty of the family courts pursuant to section 25 (1) Matrimonial Causes Act 1973 was inconsistent with the concept of summary judgement as it was necessary for the Family Courts in determining the application to have consideration of all of the circumstances including the eight matters of 25 (2) Matrimonial Causes Act 1973.

The Supreme Court found that Rule 4.4(1) of the family rules has to be construed without reference to real prospects of success test and granted Ms Wyatt's application to appeal

The Court went on to comment obiter on some foreseeable difficulties with the application.

The Factual observations

The relationship broke down 31 years ago and the marital cohabitation lasted for scarcely more than 2 years. Mr Vince did not begin to create his wealth until 13 years after the marital breakdown and Ms Wyatt made no direct or indirect contribution to the creation of this wealth.

The amount Ms Wyatt is claiming £1.9m is excessive and unlikely to be awarded, but the court recognises that she has raised some valid and significant points. She had made the sole financial contribution to the welfare of the family, specifically her care of Dane for a period of 16 years after the separation and also for Emily from 1984 to 1994 and 1995 to 1997 when she became an adult, continuing in her adulthood.

The Supreme Court ruled that Ms Wyatt should be given the opportunity to argue why Mr Vince should now financially assist her. This does not mean that Ms Wyatt will receive a substantial settlement, or even that she will receive a settlement at all.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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