Supreme Court Shock Ruling May Leave Millions Vulnerable to Litigation


Last month five Supreme Court judges handed down a decision so shocking that it could even be regarded as terrifying. Divorce is never easy, but most people would think that once the unhappy former couple have gone their separate ways, with the assets divided fairly between them, and they have begun rebuilding their lives, that the matter is finished. Not so, according to this new ruling!

About the case

The case in this scenario involves alternative energy pioneer, Dale Vince, and his ex-wife Kathleen Wyatt, who sued him for financial support 23 years after the couple divorced. As if that wasn’t bizarre enough, it also turns out that both of the former marriage partners had since married other people.

Common sense would suggest that if anybody other than Ms Wyatt herself is responsible for her financial support, then it should be the man she married subsequent to her divorce from Mr Vince. However common sense is not always at the forefront of court decisions, as this case highlights so well.

A ruling with the potential to destroy lives
The good news for Mr Vince is that he is unlikely to suffer very much financially as a result of the Supreme Court ruling. According to media reports, Mr Vince has a net worth of approximately £107 million, and the court already has ruled out awarding the £1.9 million that Ms Wyatt was seeking to obtain. So if the final stage of the court battle goes her way, she will receive a lesser sum, but still probably enough to justify her long legal fight against Mr Vince that has now reached its fourth year since proceedings began in 2011.

But while the ruling probably won’t cause Mr Vince to lose much sleep, it could be extremely bad news for millions of others. Or good news, depending on which side of the fence you sit.

Some will think it’s all very well for multi-millionaires to go through such an ordeal, but what could it mean to a man or woman of considerably more modest means if an ex-spouse decides to pursue such a case against them?

To put things in perspective, if the court finally awards Ms Wyatt a sum in the vicinity of £500,000 (which is certainly not out of the question), this would amount to roughly 0.47% of Mr Vince’s net worth. Now if you have something like £100 million sitting in the bank, and a ruling like this went against you, then assuming an interest rate of 2% p.a., it would only take about 3 months to recover every penny that you had lost.

On the other hand, if you have a net worth of £1 million, then a ruling like that would take half your wealth from you, and it’s possible that you may never recover what was lost (assuming your remaining £500,000 was left in the bank and you did not need to draw down on it, your interest earnings at 2% per annum would amount to about £833 per month, not taking compounding into account).

Of course this is a very simplistic view of the situation and the reality is much more complicated. For example, we have not included factors such as how much Mr Vince had to spend fighting the case, or the time he wasted in doing so. In fact, this case perfectly illustrates why Hylton-Potts generally advises clients against fighting cases purely “on principle”. Doing so can certainly sometimes be more costly in the long run.

A legal nightmare that could prevent people moving on

In response to the ruling, Mr Vince said that people who had divorced should have the right to move on with their lives and should not have to be looking over their shoulders all the time in case the ex-spouse decided to resurface years later to stake a claim.

Lord Wilson declared that Ms Wyatt’s claim was legally recognisable and not an abuse of process. But if this is not an abuse of process then what is? And what will be the result for an already over-strained court system if these sorts of cases become more common?

On the surface, this case does seem flimsy. It would appear that Mr Vince’s only “error” was to become wealthy after Ms Wyatt had divorced from him.

If it had been a situation where Ms Wyatt claimed that the wind farm technology from which Mr Vince made his fortune had been at least partly her idea, then the court’s affirmation of the validity of her claim would make much more sense.

As things stand now, however, it appears that anyone who has increased their personal wealth after divorce is now at risk of being subjected to similar treatment, no matter how many years have passed since the divorce.

This is true whether you are a business tycoon, a lottery winner, or even simply an inheritor. Suddenly you could find your good fortune turns sour if your former spouse decides it is not fair that he or she is not getting a cut of it.

The Supreme Court has published documents related to the case Press summary (PDF) and Judgment (PDF) if you would like to read further into either of these cases.

Preventing the nightmare from happening to you

As legal consultants, Hylton-Potts is a firm that fights for fairness every day on behalf of our clients. It does not seem fair that an estranged spouse could have a legal right to harass you through the court system to stake a claim to wealth that perhaps neither of you ever envisioned you having.

Some good news is that with a little foresight and planning, this whole horrific situation can potentially be avoided.

What you need to do if you are about to go through a divorce is to create a legal agreement that neither your estranged wife (or husband) will seek further financial claims against each other after the divorce settlement is complete. A court order to this effect should also be sought, to ensure that there is absolutely no chance of future litigation being initiated purely on the basis that your circumstances have changed for the better.

Divorce is always unpleasant, but it should not have to be a lifelong ordeal. Hylton-Potts can assist you through this process, so that you can truly move on with your life and not – as Mr Vince suggests – have to be always looking over your shoulder.