The Court of Appeal has recently held that the ex-wife of Dale Vince, the chief executive ofEcotricity, was not permitted to claim financial remedy in an application issued 18 years after the couple divorced.
In this case, Dale separated from his wife, Kathleen Wyatt, in 1984 at a time when neither of them had any assets or income and both were receiving state benefits. The decree of divorce was pronounced in 1992 and there was no evidence that the couple had ever agreed, or had imposed by the Court, a financial settlement.
In 1996 Dale Vince founded Ecotricity, the world's first green energy company. The company isnow estimated to be worth £90 million. In December 2010 his former wife made an application to Court some 26 years after separation for financial remedies on divorce. The Court of Appeal in 2013 allowed Mr Vince's application to strike out his former wife's claim on the basis that it was an abuse of the Court's process.
The first point to make is that the divorce process itself is separate to the process of division of a couple's finances on divorce. As a consequence, it is quite possible for a couple to be legallydivorced, having been granted their "decree absolute", with no formal arrangement having been reached or imposed by the Court in relation to their finances. Their financial claims against one another are, in effect, left open.
Divorcing couples may, understandably, think that because they have very few assets and a small income there is no need to negotiate and agree the division of finances. However, if a couple conclude divorce proceedings without dismissing their respective claims for financial relief - which can include lump sum orders, transfer of property, pension sharing and spousal maintenance - both parties' claims technically remain open. This means that either party can, in principle, apply for financial relief against the other later down the line. Technically, Mrs Wyatt was perfectly entitled to apply for a share in Mr Vince's wealth, even though it had been accumulated over the 30 years since they parted.
The judge in this case, however, took the view that it would be an abuse of process for Mrs Wyatt to succeed in her application where it had been so long since the parties' divorced. Importantly, there was no connection between what had happened during the marriage and the wealth that Mr Vince had subsequently created. The judge also commented on the considerable disparity between the parties' resources during the marriage and the husband's subsequent financial position nearly 30 years down the line.
If, however, the circumstances had been different, for example the marriage had been a longerone, in which the husband's wealth had been created during the marriage and if the former wifehad applied for financial relief sooner, the result could well have been different.
There are no set rules for how long a party has to come to court with his/her claim for financialrelief following divorce. It is, therefore, sensible for divorcing spouses to dismiss their financialclaims against one another, even if at the time they are divorcing they have no assets or income of any substance. In doing so it will then not be possible for their ex-spouse to come back for a second bite of the cherry in relation to their capital assets.
This article originally appeared in Wealthbriefing on the 16th May 2013.