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24th January 2017

Don’t delay, settle your finances today

24th January 2017

Don’t delay, settle your finances today

Zoe Culverwell

Posted: 24th January 2017

T: 023 8048 2242

E: Email Me

So far, in my 4 months in the Family Team at Paris Smith, there is one piece of advice that I have heard time after time in client meetings. Amongst the wealth of information and advice that is given during such meetings, this is always highlighted to the client as one of the most important things to take away. If you want to discover what this advice is, read on…

The recent case of Waudby v Aldhouse [2016] reaffirms the importance of dealing with finances on divorce as a matter of priority.  In this case, Mr Waudby, the husband, and Ms Aldhouse, the wife, married in 1982. During the marriage, the wife worked two jobs to provide for the family, following the husband’s bankruptcy. In 1990, following a building dispute and litigation, both parties were declared bankrupt. The wife suffered a breakdown and retired from work on grounds of ill-health. In 1992, the husband had an affair which resulted in the birth of two children. The wife found out in 1994 and the parties divorced in 1995.

On divorce, the wife did not bring a claim for financial remedies. Instead, she relied on the husband’s assurance that he would voluntarily provide financial provision for her. However, in 2014, almost 20 years after the divorce, and following the husband’s failure to provide for her, the wife finally brought her claim.

Judgment

At first instance, the wife received a £10,000 lump sum payment and a joint lives periodical payments order of £9,576 per annum, notwithstanding that the husband’s assets were all accumulated post marriage. The judge at first instance identified the husband’s circumstances (ownership of three cars and some savings) as appropriate for the making of a lump sum payment to relieve some of the wife’s personal liabilities. The husband appealed this order.

On appeal, the decision for the court was whether the delay in bringing the claim was ‘so potent a factor as to eliminate what might otherwise have been awarded’. The judge at first instance had relied on Wyatt v Vince [2015] to hold that the delay was not potent enough. However, in Wyatt v Vince, Lord Wilson had suggested that a court might be likely to ‘reduce or even eliminate its provision’ due to delay.

On appeal, counsel for the husband relied on the decision of Nicholas Mostyn QC (as he then was) in Rossi v Rossi [2006]. He had suggested that it would be very difficult for a party to successfully prosecute a financial relief claim initiated more than 6 years after the petition for divorce, unless there was a very good reason for delay. The 6 years stemmed from the Limitation Act 1980, which defines the limitation period for most legal claims. Counsel for the wife argued that the UK Supreme Court had had the opportunity in Wyatt v Vince to impose a judge-led limitation period, but chose not to do so. As a result, in matrimonial finance cases, there is no limitation period (if you are shocked by this, you are not alone!). The appeal judge therefore concluded that the appeal turned on discretion. Uh oh!

A distinction was drawn, as the legal authorities suggest, between cases where there is a causal connection between the applicant’s need and the marital relationship and cases where there is no such causal link. Essentially, the applicant’s needs must have been generated by the relationship.

At first instance, the judge stated that she had no difficulty in finding this link.  The wife had a budget shortfall of £798 per month. Counsel for the wife argued that her earning capacity had remained limited due to her breakdown and subsequent health problems as a result of the husband’s infidelity, her own childlessness, the loss of her home and her bankruptcy. The judge at first instance accepted this submission, stating that these factors had had a direct impact on the wife’s health problems, which were a wholly understandable result. The appeal judge disagreed, stating it was an acutely difficult issue to determine.

Of course, as time had gone on, the applicant had had the opportunity to improve her earning capacity. Further, she had survived, without support, for approximately 20 years. The appeal judge held that the judge at first instance had failed to address the wife’s susceptibility to such illness outside the relationship and her ability to survive, without support from the husband, until now. On the facts, the wife had “pursued employment, bought a house and a car, had a relationship of 4 to 5 years and survived without any financial support, irrespective of the husband’s promises and her ongoing health difficulties. The trigger for the down turn in fortune appears to have been the reduction in the ill health pension payments”. As such, the appeal judge held that the trial judge’s reasoning was “so flawed as to invalidate the conclusion” and, as a result, he allowed the appeal, setting aside the lump sum and periodical payment orders and dismissing all future financial claims between the parties.

This case has been classified as controversial, particularly given that the parties were bankrupt on divorce, and as such, had nothing to share at that time.

And here comes the advice…

This case demonstrates the real risk of failing to deal with financial matters on divorce. Although the wife in Waudby v Aldhouse was ultimately unsuccessful in her claim for financial provision, the wife in Wyatt v Vince was successful.  The difference in the two outcomes reflects the level of discretion that judges have in this type of case.

Given the legal aid cuts in family law, there is a temptation for parties to either deal with the finances without seeking legal advice, or fail to deal with the finances at all. This is dangerous. While reaching a consensual agreement with your spouse independently on divorce is highly commendable, failing to incorporate this in a court order leaves either party open to return for a “second bite of the cherry”.

Does this mean that you need to incur bill after bill of legal costs on divorce? No. We are able to offer our services on a consultancy basis, which means that we can assist you in drawing up your agreement into a legally binding document, without becoming involved in any other aspect of your divorce and finances. The cost of doing so ensures that both you, and your spouse, are protected against any subsequent claims.
For more information, please contact a member of the Family Team.

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Zoe Culverwell

Posted: 24th January 2017

T: 023 8048 2242

E: Email Me