11 March 2015

The high cost of divorce…20 years on

The importance of dealing with financial matters in a timely manner for divorcing couples has been reinforced by the Supreme Court in a landmark ruling. Five Supreme Court judges have unanimously ruled that an ex wife, Kathleen Wyatt, is entitled to make a financial claim against her millionaire ex husband, Dale Vince, despite their divorce 20 years ago…. because her financial claims were not formally dismissed at the time.

Unique case

In what in many ways was an unusual case, Dale Vince and Kathleen Wyatt met as students in their early 20s and married in 1981. They lived a new age traveller lifestyle with their son, and Ms Wyatt's daughter from a previous relationship who was treated as a child of the family, before their eventual separation in 1984. Ms Wyatt brought up the children in strained circumstances, living on benefits (and raising two further children from a subsequent relationship) and Mr Vince lived in an old ambulance, unable to make any financial contribution towards the family. The couple divorced, with their Decree Absolute being granted in 1992. Mr Vince then launched a green energy firm Ecotricity in Gloucestershire in 1995, having started his business by building a wind turbine from recycled materials to power his caravan. The business proved highly successful, so much so, that he is now said to be worth an estimated £107 million and has been awarded an OBE.

Out of time?

Despite their divorce over 20 years ago, Mr Vince and Ms Wyatt never dealt with their finances so all financial claims remained open. Ms Wyatt did not file a claim until 2011 for financial provision and funding for her legal costs. Mr Wyatt applied to strike out her claims as being out of time, but in December 2012 his strike-out application was dismissed and he was ordered to make provision for Ms Wyatt's legal costs. Mr Vince successfully appealed that decision in 2013, when the Court of Appeal set that order aside.

Ms Wyatt appealed that decision to the Supreme Court. In March 2015, the Supreme Court indicated that in principle, her application has a "real prospect of success" and is legally recognisable, despite the intervening years, as her claims were never dismissed by order of the court. Lord Wilson reinforced one of the many statutory considerations to which a court must have regard when considering the making of a financial award, being "the contribution of each party to the welfare of the family including by looking after the home or caring for the family". The court noted that Ms Wyatt had lived in circumstances of real hardship whilst raising the couple's children over the past 16 years. Although the court ruled that Ms Wyatt's claim for financial relief was not an "abuse of process", it indicated that her claims may end up being dismissed or the amount awarded relatively small in the circumstances. The court stated that Ms Wyatt's claim for £1.9m was "out of the question". A further hearing will now determine what, if any, financial award she is to receive; that Mr Vince started his business after the demise of marriage will doubtless minimise the extent of Ms Wyatt's claims, but her need for a small possibly mortgage free home may well be recognised.

The risk of letting matters drift

Today's decision highlights the importance and necessity of dismissing financial claims by a court order on divorce. It is not enough simply for a couple to divorce and obtain a Decree Absolute. Whilst they may no longer be husband and wife it does not dismiss their financial claims against the other which marriage bestows. It is imperative, therefore, that financial claims are dealt with and dismissed by a court order, to avoid potentially (very) expensive payouts at a later date. Such payouts can involve lump sum provision, ex-spousal maintenance and funding towards an ex spouse's legal costs, which, for the payer of those costs can feel as though he is "arming both sides" in the litigation. The passage of time will not be a bar to financial claims being revived many years after the original divorce as shown here. Had Mr Vince formally dismissed Ms Wyatt's claims at the time of their divorce, he could have avoided the ensuing litigation and risk of a payout. For Mr Vince, and others in his position, the risk of exiting a marriage without addressing, formally, financial matters can come at a huge cost many years later.

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