Why finalising a Financial Agreement as a Court Order is always worthwhile

The potential consequences of not obtaining a Court Order to finalise financial agreements reached at the time of Divorce have again been considered by the Family Court.

In the case of A -v- B (No 2) [2018] EWFC 45, the parties met in 1980, married in 1983 had two children, one born in 1986 and the other in 1989. The marriage broke down in 1991 when the wife formed a new relationship and left the family home. Her husband issued divorce proceedings and Decree Absolute was granted in 1992. There was no evidence that either party had applied for Financial Relief at the time of their divorce although they had reached a comprehensive informal financial agreement in 1994. As a consequence of that Agreement the husband had remained in the family home looking after the parties two children and the wife had provided financial support to the husband from 1992 onwards. In 2013 a dispute arose between the parties and in 2016 the husband issued a Financial Application seeking an order to remain living in his present home for life and for payment of a lump sum. The wife counter applied to strike out the husband's application and Mr Justice Baker agreed with her.

This contrasts with the Court of Appeal decision in 2015 in the case of Wyatt -v- Vince - in that case Mr Vince ultimately ended up paying Ms Wyatt £300,000.

How was this case different from the decision in Wyatt -v- Vince?

1. A comprehensive informal financial agreement dividing the parties' resources at the time had been concluded in 1994.
2. The wife had provided the husband with considerable financial support during the children's minority including the provision of a home and maintenance.
3. Whilst the husband had financial needs they were not huge or the type that the wife could fairly be asked to meet.
4. The husband had not suffered any financial disadvantage in his career that justified compensation. The wife had financially supported him thus enabling him to follow his career and life choices.
5. The wife had assumed that the husband would not make any claims against her; in 2006 she had purchased a property to provide a home for the children - the husband and his new wife also lived in this property - the wife would not have done this if she had known that the husband intended to make a claim.
6. The reason for the delay was that both parties considered that their informal financial agreement had concluded the financial issues arising on their divorce.

On the surface might the differing outcomes in these two cases simply be a question of a different set of rules being applied to men and women? Is there an unconscious bias that women need to be provided for in a way that men do not? Possibly, but then in this case the wife had financially provided for the husband for almost 20 years - the same could not be said in the Wyatt case. In addition - at the time of the hearing - Mr Vince was worth in excess of £54 million - £300,000 is a very small percentage in the context of this wealth. At the time of the hearing, the wife in this case was worth approximately £7million and although the husband only had approximately £60,000 of assets now, back in 1992 the wife had given the husband £10,000 of the redundancy payment she had received. Looked at in the round, fairness had perhaps already been served.

So what prompted the issue of financial proceedings 20 years after conclusion of the divorce? The husband suffered a health scare - he and his new wife decided to make Wills and as a consequence discovered that neither of them had a right to occupy where they lived. Unbeknown to the husband, round about the same time, the wife and her new husband had come to the conclusion that as the children were now grown up, it was time to sell the house and they were in the process of working out how to suggest to her ex-husband and his new wife that they move out. An e-mail from husband suggesting that he and his new wife should be able to live in the property for life landed at just the wrong moment ultimately leading to the present proceedings together with substantial costs and stress for everyone involved.

If only a Consent Order setting out the terms of the informal agreement had been drawn up and sealed by the Court in 1994 - then there would have been no scope for an argument. There is many an occasion when a Client questions the benefit of incurring the added cost of drawing up a Consent Order - particularly if having divided the assets - the intention is simply to dismiss each other's financial claims - this case demonstrates the merit of taking this step.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.