Ex husband Ordered to Pay 1.6 million 10 years after he Thought Divorce Financial Negotiations were Complete

Daniel Rushton
Head of Family Law
Grindeys Solicitors

Honest negotiations and formalising a divorce financial settlement are a crucial part of the divorce process as highlighted in a recent divorce case.

The couple separated in 2002. Following the divorce in 2006, the husband paid the wife £150,000 to pay off the mortgage and signed the family home over to her.

When they first married the couple were both teachers but the husband began a business in 1988. He owned 99% of the shares and the wife had the other 1%.

In 1990, he stopped teaching to concentrate on the business. They had three children when they separated in 2002. From this point the wife had no further dealings with the business which at the time of divorce, had a turnover of approximately one million a year.

Although in 2006 the wife had received the £150,000 and the family home she never signed the settlement agreement which had been drafted.

The lawyer who represented the husband during the initial divorce and financial negotiations confirmed that the wife agreed to the terms of the financial settlement. However, her acceptance was on the basis that the husband provided a full picture of his financial circumstances, with documentary evidence confirming it was true. He never did!

In 2013, ten years after they separated and seven years since the initial financial settlement was agreed she applied for a financial remedy order.

The judge concluded that there had been no full and final settlement, and that the husband had not provided the wife with full disclosure and so the initial financial agreement was not legally binding.

The husband was ordered to pay her a lump sum of £1.6m and to transfer 25% of his pension policies and shares to the wife and that decision was upheld by the Court of Appeal.

The judge said, “It was beyond argument that the wife had a claim. The two parties had made equal contributions to the marriage before separation and the wife had played an important role in the business during its infancy.”

This case illustrates the importance of making a full and honest disclosure when negotiating a financial settlement following divorce.

In another recent divorce case the court looked unfavourably on a husband who lied, attempted to hide money and refused to adhere to court orders during the post-divorce financial negotiations. The court labelled the husband a “disgrace” and issued court orders that forced him to comply. He was also ordered to pay his wife’s legal costs.

This case also illustrates the importance of ensuring that financial arrangements following divorce are legally finalised by way of a Consent Order if an agreement has been reached.

A Consent Order officially ends the financial relationship between a divorcing couple and means no further financial claims can be made against each other (as long as a full and honest financial disclosure has been made by all parties).

In another high profile case reported last year a wife made a claim against her former husband 27 years after their divorce. At the time of the divorce neither had many assets to fight over but the husband went on to build a multi-million pound business.

In the absence of a formal agreement to end their financial relationship following their divorce the former wife succeeded, 27 years later, the wife was allowed to bring a claim against her former husband, despite the fact that he had no assets when they divorced.

The Court actually did not have to decide whether she was entitled to anything, because the husband in question agreed to what was to him a cheap settlement, but it was still a lot of money to the wife.

Honestly negotiating and then formalising a divorce financial settlement is a crucial part of the divorce process. No one wants to be hit with a financial remedy order years after the divorce when they have moved on and rebuilt their lives. An honest formalised agreement ensures the past remains in the past!

 

About Daniel Rushton

Daniel has over 20 years’ experience as a specialist family law solicitor. He is Head of the Family Law team at Grindeys Solicitors based in Stoke on Trent.

Daniel has a particular interest and experience in dealing with business owners, company directors and members of the medical profession in matrimonial situations. For this type of work a solicitor who understands your business accounts and business structure is vital to obtain the best financial settlement possible.

Recent cases include one involving an international business and extremely valuable assets and pensions, as well as property abroad. He has acted for numerous doctors and other medical professionals, council workers, police officers and serving members of the armed services. In twenty-three years, Daniel has dealt with all walks of life and will adopt a professional yet caring approach to your situation.

Email: daniel.rushton@grindeys.com

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