The pitfalls of a verbal agreement on divorce by Kate Rayner

Divorce|Family Law|December 23rd 2016

Solicitor Kate Rayner will be Managing Partner of the new Stowe Family Law Tunbridge Wells office (for more information, click here). Previously based at the firm’s Hale office, Kate has helped resolve many intricate financial disputes during her career and has been instructed by many high net worth individuals involved in family disputes. She is Resolution-accredited for both financial issues and private children’s law.

 

Several stories have hit the headlines in recent years featuring former spouses seeking further financial provision from their ex-partner a number of years later, most often when the former spouse has been financially very successful. The most recent case is that of former teacher Glen Briers, who set up a fashion empire in 1988 – reportedly from his garage – with just £81. It is now estimated to be worth £30 million.

Mr Briers separated from his wife in 2002 and they were divorced in 2005 after 18 years of marriage and three children together. At the time of separation, Mr Briers’ business was estimated to be turning over £1 million per year. It has been reported that when he and Mrs Briers divorced, they entered into a verbal agreement regarding financial matters, with Mr Briers giving his former wife £150,000 to clear the outstanding mortgage and the former matrimonial home, estimated to be worth £700,000, was transferred into her sole name. Mrs Briers also received £10,000 by way of a “salary” and child maintenance. Mr Briers retained the business in its entirety.

In 2015, Mrs Briers commenced financial proceedings. A Court ruled that Mrs Briers be awarded £2.7 million of Mr Briers reported £10 million fortune. Mr Briers has appealed the decision and they now await an outcome from the Court of Appeal. It is hoped that the decision will establish precedents and give much guidance to this area of law.

The  first Judge to hear the cse determined that Mr Briers’ business was an undivided matrimonial asset which Mrs Briers was entitled to a share of. Mr Briers has argued that this decision has left the former Mrs Briers, “in a position which is excessively favourable” and that it was unfair that Mrs Briers should be able to share the fruits of his hard work over the decade since separation, and that her involvement in the business had been “negligible”.

By contrast, Mrs Briers’ legal representatives argue that no legal settlement was ever reached. Instead, they claimed, Mr Briers had dictated to his wife what the settlement would be and she had not accepted it as a full and final settlement, particularly when there had been no financial disclosure.

Undoubtedly this is a case which may divide people as to the rights and wrongs. Whatever side you may be on, it is a valuable lesson in how important it is to have any financial agreement following separation drawn up into a legally binding order. It is important also to address a misconception that many people still believe – that divorced automatically ends the financial ties between former spouses. It does not.

It is important that there is full financial disclosure following the breakdown of a relationship and that the terms of any agreement reached are then finalised; no matter the size of the assets. Without such a clean break order, a former spouse may at any point in the future be able to issue an application for financial provision – and could perhaps do so just at the point when there has been a windfall or great success.

Kate Rayner is the Managing Partner at Stowe Family Law’s Tunbridge Wells office. Kate worked in the firm’s Altrincham and Wilmslow offices after rejoining the firm in August 2014. She has spent many years dealing with all aspects of family law and, in particular, financial disputes covering a wide spectrum of assets.

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