Most divorcees would, wherever possible, prefer to achieve a clean financial break so that they can regain their independence and move on with their lives. A High Court ruling recently reviewed by Stuart Barton provided a powerful illustration of why that is a sensible choice.
The case concerned a former couple in their 60s who had been divorced for almost a decade. Assets worth about £1.8 million had been divided between them by a judge, but a clean break was not achieved in that the husband was required to pay the wife spousal maintenance of £17,500 a year without limit of time.
Their circumstances had since changed substantially: the husband had retired from his well-paid job in finance and contended that the time had come to discontinue the maintenance payments. The wife, who said that she was having difficulty making ends meet, argued that they should, on the contrary, be varied upwards or capitalised into a lump sum that could be used to boost her income.
Ruling on the matter, the Court noted that, when his pension was taken into account, the husband had emerged from the divorce with more than 60 per cent of the marital assets. He had, however, been generous in voluntarily increasing the maintenance payments in line with inflation. He had also paid school fees for their three children in full, although the judge’s order only obliged him to pay half.
The wife, who was some years younger than he was, had chosen to take on limited paid work since the divorce but still had some earning capacity. Her existing resources were sufficient to provide her with an income of about £25,000 a year. That was, however, less than half the husband’s pension income.
The Court concluded that the wife required an income of £50,000 a year to meet her reasonable needs. To achieve that goal, the husband was ordered to pay her a lump sum of £314,500. On payment of that sum, a clean break would finally be achieved and his obligation to pay spousal maintenance would cease. That seemed to the Court a perfectly fair and sensible means of resolving the matter.
It was, the Court observed, a matter of surprise and sadness that two such sensible and pleasant people had proved unable to compromise their differences, instead feeling the need to incur legal costs of over £227,000 in fighting each other. It was to be hoped that the imposition of a clean break would bring their disputes to an end.
We asked Senior Associate Solicitor Stuart Barton to provide some insight into the above case-
“This case highlights that in any divorce case where a clean break is not achieved, there is always the potential for further litigation between the parties. Such litigation obviously carries with it a financial and emotional cost. There will always be a limited number of divorce cases where a clean break is simply not achievable, usually where there are young children or the disparity in income between the parties is significant. However, the modern trend in such cases is to usually consider a ‘cut off’ point where ongoing maintenance obligations will cease, perhaps reducing the likelihood of future litigation. More importantly, each party is then able to plan for their own financial futures with a greater degree of certainty.
It seems likely that neither party left the court satisfied with the outcome the above case but the one consolation for both of them is that with a clean break finally achieved, the potential for further litigation was at least removed.
If you are divorcing, a number of issues may arise on which sound legal advice is essential. We can talk you through alternative dispute resolution options, to help mitigate the need for expensive and drawn-out court proceedings.”
We've Got Your Back
If you are separating, a number of issues may arise on which sound legal advice is essential. We can talk you through alternative dispute resolution options, to help mitigate the need for expensive and drawn-out court proceedings.