Court Rejects Clean Break Proposal

A husband who proposed a ‘clean break’ divorce settlement (where there is a one-off lump-sum payment and no subsequent maintenance payments are due) had his request rejected by the court recently.

The divorcing couple had two children, both in tertiary education. They had a large farming business, which turned over nearly £7 million per year. At a time when the husband knew a separation was likely, he and his father had invested £3 million in a reprocessing plant, which made losses and had reduced the cash-flow of the business.

The husband argued that as the farm land was inherited, he should retain the assets and there should be a clean break.

The judge rejected his application, ruling that his ex-wife should receive a payment of £1.5 million, plus a further £500,000 and annual periodical payments of £44,000. The husband should retain day-to-day control of the business in the expectation that it would return to profitability in the longer term.

The interesting point about this case is that the funding of the divorce settlement had to be made through a family company, which created additional complexities.

The court, however, did not regard these complexities as a reason for treating the financial arrangements any differently from normal.