The Importance of a Clean Break Order on Divorce
The recent decision in the case of Vaughan –v- Vaughan [2010] EWCA Civ 349 may result in the family courts taking a more liberal approach when deciding whether to award lump sums to a former spouse after a divorce, even when a significant amount of time has elapsed since the divorce.
In this case, Mr Vaughan made an application to the courts following his retirement to terminate his obligation to pay maintenance of £27,000 a year to his first wife, from whom he was divorced some 25 years previously. Mr Vaughan, who has since remarried and has two children at university, made the application on the grounds that his former wife should no longer be his financial responsibility, given the amount of time that had passed since their divorce.
Mrs Vaughan also made a cross-application for Mr Vaughan to pay a considerable lump sum of £341,000 to her on the grounds that she needed £48,000 a year to live on to avoid undue hardship. Mr Vaughan opposed this on the grounds that in making such a claim, Mrs Vaughan was effectively making a claim on his £100,000 a year pension fund, which he argued was not an asset of their marriage, given that he had only set it up after their divorce. It was also argued that in the event of any subsequent divorce from the second Mrs Vaughan, she would be entitled to half of this pension fund and to award the first wife a contribution from this fund would effectively be undermining the second wife’s interest in it.
At first instance, the High Court ordered that Mr Vaughan’s obligation to make periodical payments be terminated. Mrs Vaughan appealed this decision.
The Court of Appeal allowed Mrs Vaughan’s appeal as according to Lord Justice Wilson, the Judge at first instance ‘wrongly gave priority to the claims of the second wife’. The case of Roberts –v- Roberts [1963] 3 All ER 479 was considered in this regard and in particular, the principle that on marriage, each spouse takes the other subject to all existing encumbrances and obligations, whether known or not at the time of the marriage. This includes an obligation to maintain a former spouse or child of a dissolved marriage. Although the court could not go so far as to give priority to the claims of the first wife, it certainly could not give priority to any hypothetical claim that the second wife may have on any later divorce. It was therefore ordered that Mr Vaughan pay to the second wife a lump sum of £215,000 in addition to continuing to make periodical payments of the lesser sum of £14,000 per year.
Cathy Achilles, a Legal Executive specialising in family and children matters at Butcher & Barlow LLP’s Runcorn office says; ‘If you have an Order, no matter when it was made, if it does not provide for a clean break on maintenance you could risk a Court reconsidering the payments or capitalisation of the same’.
If you have any queries about the content of this article please contact Cathy Achilles at our Runcorn Office on 01928 576056 or email cachilles@butcher-barlow.co.uk.