A recent high-profile case illustrates the legal position where a party can go back to court to secure a financial settlement long after the divorce and despite a verbal agreement at the time of the split. Mediation can be used to avoid this problem arising.
The facts of the case involved a couple who married in 1984 and had three children. In 1988, the husband set up a business, designing clothing for Scooter company, Lambretta, which became very successful. In 2002 when the couple separated, the business had a £1 million turnover. The couple divorced in 2005 and as part of the divorce, the wife received £150,000 to pay off the mortgage, retained the family home worth £700,000, received an annual salary of £10,000 and additional child maintenance. The husband intended the ‘settlement’ to represent a clean break between them.
In 2015, after being divorced for 10 years, the ex-wife applied to the court for a financial order. At that time the husband’s business had an annual turnover of £30 million. The court ordered the ex-husband to pay his ex-wife £2.7 million. This represented 27% of the business’ assets. It was argued this was a fair resolution between the couple and a departure from the usual 50/50 split.
It’s a common misconception that because there was a verbal agreement at the time of separation or divorce, a party cannot apply to the court at a later date. This is not true and can cause real problems later.
In law a party can go back to court anytime after the divorce to get a financial order – this could be 10, 20 years after the divorce or even longer – the claim remains open regardless of any time period unless the claimant remarries or dies.
How to avoid a problem arising … it’s very important to agree the financial settlement between the parties at the time of the separation/divorce and to get a financial order through the court in place. Mediation can be used to enable parties to agree the terms of the financial settlement between themselves and then place it before the Judge for his/her approval, when it then becomes a binding Order.
In the case above, had mediation been used, a court approved financial order could have been in place shortly after the separation and may well have reflected the agreement the parties reached and implemented in or about 2005. Hence, there would have been no need and no possibility of going back to court at a later date.