Separation will often result in arguments about how the finances should be divided. Divorcing couples are encouraged to reach an agreement without the need to go to Court whether through Mediation, Negotiation or the Collaborative process. Where this does not result in an agreement the couple can seek resolution through making an application to court or by using Family Law Arbitration.
Where a couple who are divorcing are able to reach an agreement, a document can be drawn up which is called a ‘Consent Order’ and this is submitted to the court for approval. If the Judge considers that the agreement is fair to both parties they will approve the order and the agreement will become a court order which is capable of enforcement if either party does not comply with their obligations.
The effect of the order is usually that it is final. The matter can be returned to court if either party lied about their financial circumstances at the time of the hearing or during the negotiations to the extent that the agreement reached and the order made is not fair when the true financial position is known. Apart from this there is a limited circumstance where a Court can be asked to vary the terms of a Consent Order. This arises where the party seeking the variation can show a significant change in circumstance which would justify the varying of the original Order. Surprisingly, this may include a future inheritance received by one party or perhaps even a large lottery win.
The Court of Appeal in the recent case of Critchell v Critchell 2015 upheld a decision to vary the terms of a Consent Order. The facts of the case were that the husband and wife had recently obtained a Consent Order which provided that the former matrimonial home, worth approximately £190,000 would be transferred into the wife’s sole name with a charge back to the husband which equated to 45% of the equity in the property. The impact of this was that at some point in the future the wife would have to either find the money to ‘buy out’ the husband or potentially sell the property to pay him his share.
The court have to take into account a range of factors including the respective incomes, earning capacity, resources, length of marriage, standard of living, conduct and contributions when determining whether an outcome is fair. As there were limited assets available in this case, the courts most pressing concern was to ensure that the parties needs would be met. The Wife had a ‘need’ for the property to provide a home and the Husband had a ‘need’ to retain a share to assist him in meeting his debts.
Within a month of the Consent Order, the husband’s father suddenly passed away and the husband received an inheritance of £180,000.00. The wife then applied to the Court to vary the Consent Order on the basis that the husband had received further capital. The Court of Appeal allowed the wife’s appeal on the basis that the husband’s needs had altered due to the inheritance he had received. The Court held that due to the additional monies, the husband no longer required the charge on the property and according the order was varied so that the wife received the house absolutely.
It is extremely important to appreciate that circumstances which justify the re-opening of a final order are extremely rare. It has to be right that once a court has approved an order which says that it is in full and final satisfaction of a couples claims against each other, that the parties can consider that it is the end of the matter.
However, this case serves as a reminder that even a final order may not be final if either party face an unexpected and significant change in financial circumstances shortly after the order is made.
Lisa Honey is a Trainee Solicitor at Breeze and Wyles Solicitors Ltd and is currently undertaking her third seat in the Family Department. Lisa has gained experience in all aspects of family law, including divorce, financial settlements and matters relating to children. Lisa has also undertaken seats in Private client and Conveyancing.