There is a legal obligation in proceedings for a Financial Order following divorce, for each person to give to the other, evidence of their financial circumstances. In many cases, this is in the hope of reaching a financial agreement that would avoid Court proceedings or an expensive and lengthy trial and thus reduce the legal costs associated with divorce generally. The most essential element in this financial disclosure is the negotiations that take place to reach any form of settlement. If a settlement is achieved then the terms of any agreement must be incorporated in a clear manner in a Consent Order which must be subsequently approved by the Court.
It all sounds very straight forward so far but recording the terms of settlement in a clear manner, in a Consent Order, is not as easy as you might first think. There are a number of factors that may need to be considered, which includes the input of an experienced Solicitor, pointing out issues to the client which they may not have considered. For example, what if someone loses their job? What about the joint debts? Who has agreed to pay what? Has everything been included? A lesson in how important it is to record everything in the agreement, is exemplified by the case of Hamilton v Hamilton (2013). In this case, on separation, there were two children of the marriage for whom the wife was the primary carer. The main assets were the matrimonial home and the wife’s business, valued at £1.5m. As part of the agreement between husband and wife, the wife agreed to pay to the husband “the following lump sums” consisting of five payments on five different dates amounting to £450,000.00. It was agreed on payment of the first lump sum that the husband would transfer his share of the matrimonial home to the wife and there would subsequently be a clean break between the parties.
The first lump sum was paid by the wife but she then only paid part of the second lump sum. The wife thereafter sought permission to appeal the terms of the Consent Order. The wife lost that appeal but despite this, no further payments were received by the husband. The husband issued enforcement proceedings against the wife. The wife issued proceedings for a variation of the Consent Order. The wife claimed that despite the wording of the Order, it amounted to a “lump sum payable by instalments” and is therefore capable of variation. The husband maintained that the Court had no power to vary a series of separate lump sum payments. In order words, was this situation “a series of separate lump sum payments” or a “lump sum payable by instalments”? The distinction might seem narrow but the fact remains that a Court has no power to vary a series of separate lump sum payments but it does have the power to vary “a lump sum payable by instalments”.
Despite the Consent Order having provided for the payment of a series of separate lump sums, the Judge nevertheless concluded that what led up to the making of the agreement, allowed him to take the view that this was a lump sum by instalments. As a result, the wife was given more time to pay and her application for variation was successful.
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