Dismissing Financial Claims to Finality

Dismissing Financial Claims to Finality

Vince v Wyatt [2013] EWCA Civ 495

 

This article is part of a trilogy of articles – you may wish to read this in conjunction with “Closing the Door on the Past” and “Vince and Wyatt – Electric Shock for the Unwary”

I regularly meet people who often boast that they were able to deal with their divorce without the need for a Solicitor to be involved and they go to great pains to elaborate on how much that has saved them in legal fees.

I personally find it curious to be frank. On such an important issue, they are resorting to DIY divorces. I think this I – can – do – it – myself – attitude will in many, many cases end in tears. That is certainly my experience of it. I know for a fact that no matter how easy it seems to undertake an appendectomy I would rather always have a surgeon performing that operation. Ok, so conducting a divorce is not as complicated as surgery but I make my point by saying that I would not repair the brakes on my car even though is possible.

Whinge over and onto the legal stuff.

Most people when they undertake their own DIY divorce often with a divorce pack bought off the shelf for 49p is that they assume that the conclusion of the divorce, that is, obtaining decree absolute, is the conclusion of all matters between the parties.

Leaving issues relating to any children aside, what about the finances?

So the smarter ones will consider the financial issues that need resolving between the parties and come to an amicable arrangement. So far so good.

They then write in their best handwriting the terms of that agreement (and I will not even go into the nightmares that can produce) and they both sign it. The very smart ones will even have it witnessed by the next door neighbour.

The problem with that (Vince v Wyatt being a developed exception to that) is that the agreement is almost not worth the paper it is written on so to speak AND can create legal nightmares that need sorting when (and invariably it is “when” and not “if”) a dispute arises of over interpretation or a while plethora of other reasons.

First and foremost the parties cannot bind a court and so the agreement is not really legally binding.

Imagine this scenario: The parties do a DIY divorce, then they write up an agreement on the finances and both sign and have it witnessed. One party decides years later that they are not happy with that agreement – what is to stop them issuing a financial claim to conclude the financial part of the divorce (known as financial remedy)? Well, the reality is not a lot is stopping them.

There are some technical niceties which I will not elaborate on here (such as what is known as a Xhydias Agreement which could alter the general position that I am espousing but you get the main drift of what I am trying to convey).

The reality is that you need to end the marriage by way of a decree absolute of divorce (we all know that) AND you need to end the financial relationship by way of a consent order (if everything is agreed on the finances). Only a court can bring the financial part to a conclusion.

It is precisely for this reason that Ms Wyatt made her claim for financial remedy around two decades later and WON her case (in simple terms at the first shout and lost only on appeal because of the tenacity of Mr Vince.

The outcome of that case and what you would probably undoubtedly wish to achieve too, would be for each party never to be able to make a further claim against the other whether during their lifetime or even after their death.

(Yes, even after death a spouse or FORMER spouse can make a claim against the estate of their deceased spouse/former spouse).

To close these doors as I call them, as most would say to make the deal “in full and final settlement” you need that consent order dismissing all claims each party has against the other.

I am not sure you will find that in a DIY pack for 49p.

The moral of the story is that Mr Vince found out the hard way; do not make the same mistake.

 

This information provided in this article is not intended to constitute legal advice and each relationship breakdown requires careful consideration in our view by a fully qualified Solicitor before decisions are made and before you embark on a certain course of action.

Shak Inayat

Solicitor

0207 183 2898

Closing the Door on the Past

Closing the Door on the Past

Vince v Wyatt [2013] EWCA Civ 495

My vindication to all my former “doubting Thomas” clients

 

This article is part of a trilogy of articles – you may wish to read this in conjunction with “Dismissing Financial Claims to Finality” and “Vince and Wyatt – Electric Shock for the Unwary”

At the time of writing this article (August 2013) I will have been qualified for nigh on 18 years. So for almost 20 years I have been advising clients, rich and poor, old and young, to do what I refer to as “closing the doors”.

I have explained time and time again that a divorce ONLY ends your emotional and physical relationship; it does not end their financial relationship. I have vehemently expressed a strong view that in order to do the latter, they need to (wherever possible) close what I have referred to as “closing the lifetime door” and “closing the death door”.

Let me explain: when parties divorce and resolve their finances whether by agreement or by litigating; the distribution of the assets, even if evidenced in writing, signed by both parties does not prevent the other former spouse from coming back in later years to make a (further) financial claim (under the Matrimonial Causes Act 1973)>

To make matters worse, even after a former spouse passes away, the surviving ex-spouse can make a claim against the deceased spouse’s estate if reasonable financial provision has not been made for them. Can you imagine how that may feel; that at the time of dealing with the loss of a loved one (the deceased spouse) the executors, usually perhaps the grown up children, now have to deal with a financial claim too (under the Inheritance [Provision for Family and Dependants] Act 1975).

Let me give you an example; let us say poor Jack and Jill decide to divorce. They proceed to decree absolute, all fine and dandy so far. They decide that they do not need a Solicitor and so amicably share the assets in whatever proportions they see fit. Both are happy, but both are smart (or so they think) and they write it all down and sign the document in the usual “in full and final settlement” terms or similar words to make it cast iron.

The problem is that it is not cast iron. That negotiated settlement is not much use frankly in protecting either of them in the future.

As I mentioned, the Matrimonial Causes Act 1973 allows a spouse or FORMER spouse to make a financial remedy claim and the courts function cannot be usurped by an agreement reached between the parties (in simple terms).

So off they trot, happy that they have saved probably a couple of thousand pounds in not using a Solicitor. Bargain.

Jill then (using an actual case I had to deal with as an example) comes into my office very distressed with a pile of court papers just after her mother sadly passed away eight years after her divorce (which I did not do). The court papers were from her very naughty ex-husband who decided that they needed to resolve financial issues to finality and his Solicitor expressed the (right) view that this had not been achieved by their agreement, even though it was stated as being in full and final settlement.

At the time of her divorce, both were unemployed and “penniless”. Her legal advisor at the time felt that there was no need to “close the doors” dismissing financial claims against each other and so no financial consent order was prepared or sealed by the court.

Now poor Jill had bettered herself, got a good job and good prospects and indeed inherited a substantial sum of money from her late mothers’ estate. She was far from penniless now.

Had she prepared that financial consent order and “closed the doors” she would not have been in this predicament.

Going back to the title of this article, I talk about vindication. I have always advised my clients, to dismiss all claims each has against the other, whether they are wealthy or not, because their circumstances could change, hopefully for the better.

Often clients have looked at me with suspicion, even derision on rare occasions, that I suggest such a thing because it is a mechanism for me to extract more money from them. They fail to appreciate that the reason for the legal advice is to protect them. The vast majority have accepted my reasoning and honesty, the odd client has not much, to their detriment.

In the recent case of Vince v Wyatt ([2013] EWCA Civ 495 for all you boffins out there) the Court heard that Dale Vince and Kathleen Wyatt married in December1981. At the time both were receiving state benefits. They had a child in May 1983 and separated in February 1984.

In October 1992 Mr Vince and Ms Wyatt were divorced. At the time of the divorce neither party had any assets and both were receiving state benefits. Ms Wyatt had a relationship with another man with whom she had children. Mr Vince married his current wife in 2006 with whom he has a son.

It is unclear whether any financial orders were made at the time of the divorce in 1992. Given the time which has elapsed all the court papers apart from the divorce decree itself have been destroyed. The files of the solicitors involved at the time had also been destroyed long ago.

In 1996 Mr Vince founded Ecotricity, the world’s first green energy company which has since grown into a very successful business estimated by The Sunday Times Rich List to be worth £90m.

When the matter went to court, the Family Division of the High Court declined to strike out Ms Wyatt’s claim as an abuse of process and ordered that Mr Vince furnish Ms Wyatt with a fighting fund to bring the claim against him.

Yes, you read it right first time: Mr Vince had to pay Ms Wyatt money to fight her case against him. Ouch.

(Fortunately – depending how you look at it), in a unanimous decision, on appeal, the Court of Appeal upheld Mr Vince’s appeal against a judgment given in the lower court.

The Court of Appeal ordered that Ms Wyatt’s claim for a housing fund and capitalized lifetime maintenance should be struck out because at the time when Ms Wyatt should have brought her claim neither party had any money and both were in relationships with new partners. Mr Vince’s present wealth was generated years after the parties divorced as a result of the success of the Ecotricity business.

The outcome was a just and fair outcome. It was a good job Mr Vince had the money and the sense to appeal. Many others may not have. Phew.

The moral of the story to all those doubting Thomas’ who thought I was seeking to line my purse with their hard earned money. You believe me now don’t you?

To those who did not believe, it is well, erm hard cheese.

Ignore your Solicitor at your peril.

 

This information provided in this article is not intended to constitute legal advice and each relationship breakdown requires careful consideration in our view by a fully qualified Solicitor before decisions are made and before you embark on a certain course of action.

Shak Inayat

Solicitor

0207 183 2898