Divorce ruling highlights the need for financial arrangements

The head of family law at Macks Solicitors, says the landmark Supreme Court ruling in the case of a former New Age traveller who became a multi-millionaire underlines the importance of formalising financial arrangements after divorce…

Marriage is a serious commitment – “in sickness and in health”. But should that commitment continue years after the marriage has formally ended through divorce proceedings?

It’s not unusual, when a marriage breaks down, for couples to reach an agreement between themselves regarding financial matters. Divorce proceedings may be issued to end the marriage, but some people may not formally draw a line under the financial connection between them.

This may be because there are no significant assets or do not want to pay lawyers’ fees, or perhaps they have agreed matters and trust each other not to change this arrangement.

My advice is that clients should always formalise a financial agreement. If both parties agree, they don’t have to go to court. They just need to prepare a document setting out the terms of the agreement, which is signed by both parties. The document is then sent to the court to be approved by a judge.

If the agreement provides a financial clean break between the separating couple, the door will be firmly closed against either party bringing a financial claim in the future.

The Supreme Court has now verified that there are no time limits for bringing financial claims in divorce proceedings, which there are in other areas of law. The case concerned Kathleen Wyatt, 55, and Dale Vince, 53. The couple married in 1981, separated in 1984 and the divorce was finalised by 1992.

Ms Wyatt had a daughter from a previous relationship and the couple had a son together in 1982. Ms Wyatt had two further children in a subsequent relationship. Excluding brief periods they spent with Mr Vince, Ms Wyatt was the primary carer of the children.

Mr Vince made occasional payments to support Ms Wyatt and the two children and bought her used cars, but there had been no financial order in the divorce proceedings.

At the time of divorce, neither party had assets or income. They lived a New Age traveller lifestyle, often surviving on state benefits. Mr Vince travelled in an old ambulance and an interest in green energy led him to develop a windmill business.

The Supreme Court’s landmark decision allows Ms Wyatt to pursue a financial claim against Mr Vince, who now has an estimated £107m fortune.

Ms Wyatt initially made a financial claim in 2011 when Mr Vince appealed on the basis that she was too late. However, five Supreme Court Judges unanimously ruled that Ms Wyatt can be allowed to pursue a claim.

But does this mean the floodgates will open?

I always advise clients that if they don’t close the door on any future claims, there’s a risk that a former spouse may make a claim if their financial circumstances change, after a lottery win or inheritance, for example.

Usually, my advice is that with the passing of time the chances of such a claim succeeding is reasonably low, but the ruling in Ms Wyatt’s favour may change this view.

Lord Wilson said the court must have regard to “the contribution of each party to the welfare of the family, including by looking after the home or caring for the family”.

Ms Wyatt had been the primary carer of the children and is now in poor health, lives in a house in a state of disrepair and is supporting her adult children.

Interestingly, this case can be contrasted with the recent case of Wright, concerning a millionaire racehorse surgeon, in which the judge said a mother should work once children reach the age of seven.

The judge in that case brought to an end a joint lives maintenance order, albeit over a five-year period, indicating that when a marriage comes to an end, the parties should be given time to adjust to their new circumstances before looking to be financially independent.

At this stage it is unknown how much, if anything, Ms Wyatt will secure, as her claim may still be dismissed. It appears unlikely she will secure the lump sum of £1.9m she was allegedly seeking.

It is possible, however, that she may secure a modest settlement to include a lump sum, allowing her to purchase a more comfortable, mortgage-free home.

This is an unusual case, and while it may encourage some people to pursue claims years after a divorce, I would urge caution. Each case has to be looked at on its specific facts and the passage of time will diminish the prospects of success.

What is clear, however, is that if a couple require finality when they decide their marriage has come to an end, they should go down the divorce route. It is only through this process that a court order can be obtained setting out the terms of any  financial settlement.

A separation agreement, even if prepared by solicitors, is not an absolutely watertight settlement. If the court order provides for a clean break, the door will then be permanently shut against any future financial applications.

Mr Vince has allegedly spent approximately £500,000 on legal costs to date. Ms Wyatt apparently visited solicitors in 1984,1992 ,1996 and 2002 before issuing her claim in 2011 and the assumption is that she was advised not to proceed, given the passage of time.

This demonstrates the unpredictability of the law in this area and the costs that can be incurred if the court is asked to determine a case.

I will always, where appropriate, encourage clients to try to reach an agreement out of court. There are various processes that can be used, such as mediation and collaborative practice.

Whatever way the agreement it is made, even if it is simply for the parties to walk away from each other and make no claims, it is vital that it is recorded in a court order to provide as much future certainty as possible.

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