UK: Being Legally Divorced Does Not Mean The End Of Financial Claims

Last Updated: 16 January 2017
Article by Laura Webster

The recent decision of Wyatt v Vince has sent shockwaves through the legal world and produced two schools of thought; one which supports the Court's decision in awarding the wife a share of her ex-husband's fortune 19 years after their divorce, and one which believes the judgement to be an unorthodox decision which opens the floodgates to endless unfounded claims for financial relief long after the divorce has been finalised.

So why was a historic claim for financial relief able to be brought so long after the divorce?

Firstly, no documentary evidence existed to confirm whether the parties had formalised a financial settlement dismissing all future claims. Mr Vince argued that a Clean Break Order had been entered into while Ms Wyatt's case was that no such Order was made. The conclusion of the Court was that in the absence of a Consent Order, it could not assume that all future claims had been dismissed.

Secondly, there is no limitation period for such claims to be brought.

Background to the appeal

The couple met and married in 1981, separated in 1984 after having a child and divorced some 8 years later in 1992. At the time of the marriage, neither party had any income or assets and they lived largely on state benefits. However, in the mid 1990's, Mr Vince founded a company which came to have an estimated market value of £57m. News of Mr Vince's post-marriage wealth resulted in an application by Ms Wyatt for a lump sum payment of £1.9 million in settlement of all claims (which she argued remained open) and for legal costs.

The outcome and its implications

The parties agreed to settle on the basis that Mr Vince pay Ms Wyatt a lump sum of £300,000 in settlement of all further claims plus payment of her legal costs. Albeit a modest success in comparison to the original claim, the Court's decision is very unsettling for divorced couples who are yet to legally finalise financial matters.

It would appear that the main factor in Ms Wyatt's success was the consideration the Court gave to her contribution to the family in raising the couple's son, deemed to be unmatched by Mr Vince.

So why does the general consensus of opinion appear to demonstrate a reluctance to celebrate this case as a victory for divorced mothers who sacrifice their own careers to raise the children and commend the Court for recognising, valuing and compensating the same? Perhaps the answer to this is twofold with both legal and moral connotations. Legally, it is difficult to comprehend the weight given by the Court to such a contribution when balanced against the short duration of the marriage, the low standard of living of the parties and the delay in proceedings being brought. Morally, it is inconceivable that a party should be entitled to a portion of an ex-spouse's wealth generated so long after and entirely separate to the marriage.

While the decision in this case leaves the landscape in this area somewhat unclear, we appear to be able to take 3 key points from it with as much certainty as any litigation will allow. Firstly, that in any claim in which the existence of a final order is uncertain, the Courts are likely to assume that one was never entered into and allow the claim to proceed.

Secondly, regardless of whether the claim is ultimately successful, the Respondent will have to endure protracted Court proceedings and incur considerable legal costs (which will far outweigh the cost of finalising a financial settlement at the outset).

Thirdly, but most importantly, the case highlights the importance of ensuring that all financial settlements, regardless of the value and complexity of the assets involved, are embodied in a Court Order, not only to protect the assets being divided at the time but also to provide financial certainty in relation to assets which might be accrued post-divorce. In a climate where legal aid is available only in extremely limited circumstances, it is all too tempting for divorcing couples to resolve their finances by way of an informal arrangement or in some cases, not at all. The decision in Wyatt v Vince should serve as a huge wake up call to all divorcees who failed to formally finalise financial settlement at the time of divorce and all those who are currently engaged in or contemplating financial remedy proceedings.

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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