At the same time that a couple divorce, it can often be vital that they tie up their financial claims and agree a settlement. If that isn’t done they will each leave the marriage exposed to the other spouse’s financial claims.
Regardless of the length of their marriage, that exposure can continue for the rest of their lives. It can lead to financial claims being brought long after the divorce has occurred and at a time when the financial situation of the person on the receiving end of the claim is much improved.
Owing to the uncertainty this brings with it, leaving claims open like that is seldom ever advisable.
There are rare occasions where it can make sense to defer from crystallising financial claims on divorce.
An area where this is sometimes considered is in relation to pension claims where the pension is in payment. There are some occupational schemes, such as the Police, Firefighter’s and Armed Forces pension schemes, where the pension will begin paying an income to the scheme member long before the other spouse would be due their share under a Pension Sharing Order. If a pension sharing order were made at that time it would bring about an immediate reduction to the pension member’s income, but the corresponding payment to the transferee’s income wouldn’t begin for several years more. The window until the spouse’s pension payments start sees a far reduced pension income being paid. In those circumstances adjourning pension claims can be looked at so the reduction in income occurs at a time when the receiving spouse can begin receiving their share of the pension income.
Another area where adjourning claims might be considered, which has recently been the subject of a High Court case, is where there is a lack of disclosure.
In that case (Joy v Joy [2019] EWHC 2152(Fam)), the husband had settled a trust valued at £70m. Although he said there was no copy of the trust deed available, he claimed that he had been excluded from the trust and that he was destitute. When the case was first looked at in 2015, the High Court considered the trust was an elaborate charade stage managed to avoid the wife’s claim.
The Court adjourned the wife’s capital claims for three years in the belief that the husband would by that time have received money from the trust.
Three years later the case came back to court and the husband’s situation was looked at again. By that time, he was living in two opulent homes in England and France. He told the Court that he had received €845,000 in gifts and loans. Meanwhile, the Court considered the wife’s situation dire.
The judge had little hesitation adjourning the case for a further four years, by which time the husband’s loans would have been due for repayment. In the meantime, the husband was ordered to provide extensive evidence of his financial situation on an annual basis.
Adjournment is never an option that is taken lightly in these circumstances, particularly if there is a concern that the spouse who is not providing the disclosure will only return after the adjournment to say their position has worsened. The Court extensive disclosure powers however, and against the backdrop of a £70m trust, the only way that the husband is likely to secure a release from the court’s ongoing scrutiny will be to come clean and look to settle his former wife’s claims.