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17/06/2015 By: Jane Booth
There have been a couple of cases which have featured in the press recently which have underlined the importance of getting a proper court order confirming the financial deal following a divorce. In one the agreement was not formally approved by the court. In the other there wasn’t an order at all.
The first case involved a doctor’s wife (Ms Wilson) who was reportedly forced to swap her £3.2m home for a rented council flat and to live on benefits after her and her ex’s attempt to settle their divorce on-the-cheap went “completely wrong”.
Ms Wilson was a nurse and a property developer and, according to her barrister, “came out of her long marriage to Dr Wilson, which generated millions of pounds of matrimonial assets, with nothing”. The couple lived in a substantial five-bedroom house in an affluent village near Ascot, Berkshire. The property was reportedly worth around £3.2m and the couple had thought it was suitable for development.
When the marriage broke down they were still on speaking terms and decided to go ahead with the development (creating 15 luxury flats with leisure facilities and a swimming pool) to maximise the funds available to divide on divorce. Ms Wilson claimed that they were encouraged by a solicitor to save money by settling their divorce by agreement.
They came up with a deal where she would pay Dr Wilson £500,000 for his share of the house. That would allow her to get finance to do the development work and to pay him another £1m once the development was complete. The problem, she claimed, was that although she re-financed to pay the £500,000, the settlement was not actually approved by a judge when they submitted it to court.
Ms Wilson claimed that she was not then able to get further finance to complete the work as the lenders turned her down because Dr Wilson had registered a matrimonial home rights notice on the property.
Ms Wilson claimed she was, therefore, unable to keep up the repayments and sold the property for £1.9m, leaving her, we understand, without any funds left over once she paid off the mortgage and the loans.
This case highlights that, even if a settlement is reached amicably, it is essential to take legal advice on its terms and to ensure that it is made into a sealed order by the court. An eye needs to be kept at all times on implementation of the settlement and caution should be exercised when considering whether to implement aspects of a deal before the order has been formally approved by the court.
This case is timely given the recent and ongoing dispute in the case Wyatt v Vince. In this case an ex-wife is trying to make a claim, 20 years after the marriage ended, on the millions of pounds the husband made after the marriage. Mrs Wyatt claims that a financial consent order was not made at the time of the divorce and, indeed, the court found that there was no evidence of one having been made. The Supreme Court unanimously refused to dismiss Mrs Wyatt’s financial claim, thus allowing it to be heard now despite the period of time that has passed since the actual divorce. Whether she actually ends up with anything when the full case is heard in due course is a matter for speculation.
Up to now vast costs have been spent simply on the argument about whether she has the right to carry on with the claim and she’s won that round of the contest. Although Mrs Wyatt has been warned by the court that she’s not going to get nearly as much as she’s set her stall out for, the double whammy for Mr Vince is that he’s funding her legal costs as well as his own as it’s going along so he’s basically fighting on a point of principle as he’s unlikely to get those costs back even if Mrs Wyatt comes out of the whole business empty handed.
The moral of this sad story, therefore, is that it is essential to resolve financial matters at the time of the divorce and to get that formal court order. If Mrs Wyatt and Mr Vince had done that then there would have been no argument to have so many years down the road.