Cambridge Family Law Practice

A divorced man who lost money on the sale of investment properties thanks to the behaviour of his ex-wife should be awarded more than £120,000 in compensation, a family court judge has ruled.

The case concerned a divorce settlement agreed in 2021 between a couple, both in their 60s, who had separated in 2016. The settlement, also known as a financial remedies order, gave the couple’s former home to the wife, with the husband receiving, in exchange, three investment properties subject to mortgages. These were all technically owned by the wife only, and as a result the mortgage lenders declined to transfer ownership to the husband. The former couple’s best remaining option was, therefore, to sell the three properties and they agreed to do so. Nevertheless, the wife withdrew from the process and instead borrowed money against the properties. As a result, her former husband was only able to sell the properties at a lower-than-expected value.

He therefore returned to court seeking compensation for his losses on the sales via an adjustment to the financial settlement. His application relied on the so-called Thwaite jurisdiction, named after 1981 case Thwaite v Thwaite. This allows divorce settlements to be changed, or ‘varied’, as long as they have not yet been put into effect.

The wife objected to the husband’s application, seeking to have it struck out and a whole new settlement agreed.

Sitting in the East London Family Court, Her Honour Judge Reardon noted that:

“The very existence of what is known as the Thwaite jurisdiction is controversial.”

She added:

“In Thwaite the Court of Appeal upheld the decision of the lower court not only to decline to enforce an unexecuted transfer of property order, in circumstances where the wife in whose favour the order had been made had moved with the children to Australia, but to exercise its discretion to make a fresh order providing for sale of the property and division of the proceeds.”

The Judge refused the wife’s application, saying she could not see any “realistic prospect” of her succeeding. She highlighted the wife’s tardiness in seeking legal representation, as well as her failure to attend a crucial hearing and communicate properly with the husband’s lawyers. Such behaviour had prevented the full implementation of the 2021 settlement.

Nevertheless, the husband’s application had its own failings. The evidence did not fully support his claims about a loss in the value of the two of the properties. Only one had been sold at a clear undervalue because the wife had stopped paying the mortgage. The mortgage lender had therefore given the husband just three months to sell it on.

It was fair, the Judge ruled that he be compensated for this loss. She ordered a lump sum payment of £120,200 from the assets the wife had already been allocated, meaning the husband would receive 60 per cent, compared to the wife’s 40 per cent. She had three months to make the payment, or the sale of the former family home would be ordered.

Tricia Ashton, one of the partners here at Cambridge Family Law Practice, notes that “Thwaite is rarely used but can be a helpful tool in the family lawyer’s toolbox, where circumstances align. Here, the former wife was punished for effectively seeking to undermine the deal previously reached. That said, the former husband wasn’t allowed to piggyback his other – apparently unfounded – issues with his ex-wife’s post settlement behaviours on to the key problem here.”

The ruling is available to read here in full here.