Financial settlement based on husband’s return to work ‘not wrong’

Divorce|August 12th 2016

A financial settlement contingent on the husband’s return to work was not unfair, the Court of Appeal ruled.

The couple in question who married in 1994. During the subsequent seven years they had two children and moved to Dubai to progress the husband’s career in banking. Not long afterwards however, the bank employing him failed in the midst of the global financial collapse that year. Despite losing his job he the husband still managed to profit from the situation by buying and selling on bank assets, earning him a large sum and allowing him to take a long break from work.

The couple separated in 2011. The wife returned to the UK where she launched divorce proceedings, while the husband remained in Dubai.

The couple owned three properties – the former matrimonial home and two buy-to-lets. Other assets included a plot of land in Pakistan and a trust holding more than £1 million. The overall value of the family’s assets was estimated to be around £3.75 million.

Despite this wealth, the wife had  accumulated substantial debts of £600,000. Since the separation the husband had been paying her £2.500 per month and also covering the household bills and children’s school fees. Her earning capacity was modest while the husband’s remained high despite a serious illness.

When their divorce proceedings reached court, the wife received a higher share – approximately 55 per cent of the couple’s assets, including the former matrimonial home and funds to pay off both the mortgage and her personal debts.

The husband took the case up to the Court of Appeal, complaining of alleged inconsistencies in the division of the assets and suggesting the Judge had wrongly assessed each party’s earning capacity. It had been wrong, he claimed, to order ‘periodical’ (regular) payments from his accumulated capital while he was without work.

Lady Justice Black accepted only some of the husband’s arguments. She agreed that it had been unfair to award a guaranteed lump sum to the wife on the basis of assets still tied up in ‘unrealised’ assets (i.e. unsold property or shares), when their value remained untested. Instead, the assets in question should have been transferred to her.

But she rejected claims that the order had been unfair in expecting the husband to return to the work in the future, or that periodical payments from capital were unreasonable, as this return to work was expected to take place in the near future.

She declared:

“Standing back from the detail, the husband received 45% of the family’s assets on the figures as the [original judge] took them to be. His share included assets which could be realised if need be, and he himself anticipated getting a job in the near future. If the individual elements of the order withstand scrutiny, I do not see that there is a reason to condemn it as a whole as imposing undue stress upon the husband.”

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