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Deed of separation for finances needs court order to be enforceable

The Family Court recently heard an application by an ex-wife (W) for LSPO (an interim order for legal fees) and interim spousal maintenance payments when she had signed a deed of separation 30 years ago, but the deed had not been converted into a court order so was not legally binding.  However, the ex-husband (H) sought to hold W to the terms of the deed.

Deed of separation

Bradie Pell, partner and head of Graysons’ family team

W made the application on 30 May 2023 when she was 64 years old.  H was 72 at the time.  They had married in 1984, separated in 1993 and divorced in 1998.  There were no children.

H was very wealthy, having had a successful career that included founding a company in 1990 that was listed and sold.  His share of the sale was £314 million.

W’s claim for LSPO was £227,321 plus interim payments of £11,436 per month

The deed of separation said that there was to be a clean break and H was to pay W the sum of £702,000.  W claimed that she had no recollection of entering into the deed, despite having signed it and instructed solicitors at the time.

H complied with the deed but also provided further financial support to W from 1999 (according to W) or 2002 (according to H), paying her utility bills, BUPA cover, buying her a car, paying for education courses and a monthly allowance which increased over time to £8,500 per month from April 2016 onwards. In 2009 he also loaned W £2,145,000 to enable her to buy a property in London costing £3,500,000.  This was subject to a declaration of trust dated 2009 and later amended to 2019, which recorded that W could live in the property until her death, that the loan should be interest-free and repayable to his children in equal shares and that it would be treated as a gift to W if H’s death preceded her’s.  The property was valued at £4,950,000 at the point of the court proceedings.

In March 2022, H told W he would cease all payments and that she should sell the house.

In July 2022, H reduced the monthly payments from £8,500 to £5,000 and in December the same year, he stopped the payments altogether.  W’s solicitors pressed H and in April 2023 he offered W £3,000 per month on an interim basis.  He increased this to £4,000pm in May 2023. W found both sums unacceptable and H did not pay.

W was seeking a clean break of around £5 million, and H was seeking to hold her to the terms of the deed of separation. H confirmed that he had the liquidity to meet a £5 million payment. W’s assets included the interest in the London property, £600,000 in chattels and art, an anticipated inheritance from her father of £35,000 and bank balances of around £15,000.

H said he thought the deed had been converted into a court order, but despite extensive searches, none was found.  Therefore, Judge Peel proceeded on the basis that W was not barred from her application and financial claims remained available because no court order had dismissed them. Looking at previous cases, the judge noted delay could be taken into account, but that W’s application was strengthened by H’s uninterrupted financial support for over 20 years.

In September 2023, the judge said that W had an arguable case, and whilst time would tell what the actual outcome would be, he ordered that W should receive interim payments of £8,500 per month, backdated to the date of W’s application – May 2023, saying that it would be unfair for her financial support to stop when she had been used to receiving similar sums. He also awarded W LSPO of £200,000, saying that her claim of £227,321 was a little overstated.

Bradie Pell, partner and head of Graysons’ family department says:

“We wait to hear what the final settlement or court’s decision will be, but this is a reminder that a deed of separation in respect of finances, whilst useful in some cases, is only a holding agreement.  A deed of separation is not legally binding and does not stop either party from making a court application for financial claims to be considered.  It needs a court order to ensure that the agreement is legally binding.”

Author: Bradie Pell

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