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/ 17 Oct 2014

Post-divorce relationships and financial settlements – A fly in the ointment

Last month, Mr Justice Mostyn, in the case of AB v CD, stated that when it came to assessing the needs of parties, a new relationship was a ‘significant fly in the ointment’. The problem arises when one party begins a relationship with a new partner before finalising the financial arrangements following their divorce.

The case and settlement
The couple in question married in 2003. Divorce proceedings were begun by the wife in 2012. The case was particularly complicated with regard to matrimonial assets, due to the existence of family trusts and businesses, and that the husband, whilst on paper was worth little, came from a wealthy family and in fact had assets of around £3.5 million. The divorcing couple lived together in a house held on trust to ‘ensure that in the long term it remain[ed] available as a farm or estate asset’ for the husband’s family, though the wife stated she believed she had a beneficial interest in the home. Whilst the husband argued the wife had no interest in the matrimonial home due to its being held on trust, the wife was awarded a half share in the property, based on the sharing principle and the fact that as the matrimonial home it was fundamental. A lump sum of £23,000 was awarded to be payable immediately and the remainder awarded on terms of a life tenancy. Other considerations were made and in total the wife was awarded just over £250,000. Later, the trustees appealed the award but this was dismissed.

The fly in the ointment
Whilst the split of assets is not overly controversial considering the complexities of the case and presence of trusts and inherited assets, interest has been sparked by the Mr Justice Mostyn’s considerations as to whether the payment of £250,000 was in fact a sufficient sum to meet the wife’s needs – a fundamental consideration in assessing the division of assets in financial proceedings.

He noted that such a sum, if the wife were ‘assuredly single’ may not be enough to allow her to relocate to closer to her family and friends, where she reasonably wished to move to. However, Mr Justice Mostyn stated he was faced with a problem, which he considered a ‘significant fly in the ointment in the assessment of need’, being that the wife had formed a new relationship.
During the lengthy proceedings, the wife began a new relationship with another man, which had been going on for nine months by the time of the final hearing. Most would still consider this a fairly new relationship and the wife stated she had no plans to move in with her new partner. The wife’s failure to tell the court of her new relationship was partly to blame, due to the duty of full, frank and honest disclosure.
Mr Justice Mostyn stated:
‘One cannot make assumptions, if it is not full blown cohabitation akin to marriage, that it will grow into that, because if it does not the wife may be left stranded between Scylla and Charybdis if the assumption is wrongly made. On the other hand, if one makes a needs assessment on the basis that she is a single woman and she soon cohabits, then the paying party in the ancillary relief proceeding can rightfully feel significantly aggrieved.’

It was concluded the new relationship was ‘strong’ and could not reasonably be ignored. As such, the sum of £250,000 was reasonable.

The effect on future financial proceedings cases
There has been much discussion and debate in the media regarding the outcome of the case, which on the face of it seems to suggest 1) that a party to financial proceedings following divorce should avoid new relationships until their case is settled and 2) that women should expect their new partner to support them, even in short term, non-cohabiting relationships, on the basis that they may move in together in the future. We do not know what outcome Mr Justice Mostyn would have reached if it were a man in a nine month relationship with a woman and so the media has focused on this second issue in particular.

This issue was addressed in Grey v Grey in 2009 and the court made it clear that spousal maintenance would not been payable where there was cohabitation. In this case however, there was no cohabitation, merely the prospect of it. Most people would probably agree nine months is not a long-term relationship; perhaps still the ‘honeymoon period’ and there is every possibility and indeed likelihood that the couple will not go on to live together. It is, therefore, somewhat surprising that Mr Justice Mostyn seems sure the relationship will continue and that furthermore, the wife’s new partner will be willing to support her and make up any potential shortfall she may face, following the judgement, which Mr Justice Mostyn himself noted could arise for an ‘assuredly single’ woman.

Whether or not this judgement is a one-off, due to the particular, complicated facts of the case or whether it indicates shift in how needs are assessed in the light of new relationships it is too early to tell. In the meantime, what the judgement certainly is, is food for thought for divorcing couples who may be considering a new relationship.

If you have any such issues or are facing divorce Hanne & Co have a large specialist team and you can call for advice on 020 7228 0017

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