Delaying the ‘clean break’ – wise or unwise?

17th February 2021

As England and Wales waits for ‘no-fault’ divorce laws to come into force, some couples may be considering putting off their divorce and financial ‘clean break’ order.

What are the possible consequences of delaying?

Value of the family home

One important factor for parties to consider is the value of the family home. If an agreement cannot be reached and a valuation is required, the court will value the family home at the time of court proceedings in most cases.

This can be an issue when, for example, a property has increased substantially in value since the date of separation and one party feels the other should not be entitled to the increase in equity because they have been the one maintaining the property since separation.

Business valuations

Another issue may be the value of any business assets. Most parties do not want ongoing business ties after they have separated, and generally one party retains the business, with the other receiving a lump sum.

If the value of a business is not agreed, there are a number of different methods an expert can use to value a business. The court recognises that a valuation may not provide a true picture of a business’ value and valuations are treated as a guide, rather than scientific absolutes.

In most cases the court will require an up-to-date valuation i.e. the present market value of the business. Only in exceptional circumstances will a future valuation be used to determine a fair financial outcome.

Historic valuations may also be relevant, particularly in cases where arguments about post-separation accrual are raised. For example, assets may need to be valued at the date of separation and compared with valuations at the date of trial.

This is an important factor for parties with business interests to consider, particularly in these uncertain times.

Long delays

There can be detrimental consequences in cases where there are long delays.

In the case of Vince v Wyatt [2013] the Court of Appeal initially struck out the wife’s application for a financial order as it was made 27 years after separation. However, the Supreme Court overturned the decision and allowed the wife’s application to proceed.

The court clarified that the wife’s application was legally recognisable (although appreciated that the application faced “formidable” difficulties due to the delays). One of the main issues was that the husband did not begin to create his current wealth until 13 years after the breakdown of the marriage, and the wife did not contribute to the creation of his wealth. In this instance, the wife sought £1.9m but settled on receiving a lump sum of £300,000.

In the case of Briers v Briers [2017], the wife issued court proceedings eight years after the husband alleged that they had reached an agreement surrounding their finances. A financial ‘clean break’ order had not been obtained, and the court found that the parties had not reached a concluded agreement as alleged by the husband.

The wife’s application proceeded, and the delay was an additional factor for the court to consider in determining the financial remedy application. The wife’s equal share of the assets was reduced to between 27%-30% to reflect her responsibility for the delay.

Related Blogs

View All