Husband to pay wife lump sum 29 years ‘after’ divorce

For those who enjoy the blessing of a happy second marriage, there may still be ongoing financial obligations to their first wife (or indeed husband) which, by virtue of the second marriage are not necessarily terminable. Commonly, it is the husband who is accountable to his ex wife for indefinite periodical payments. Whether one considers this fair or not, it becomes problematic if the husband decides to re-marry. His new family will naturally bring fresh financial demands and consequently, he will often apply to the court for an order to vary the periodical payments to his first wife under the Matrimonial Causes Act (1973). The question is whether the ‘second wife impact’ should influence the judge regarding either the termination of periodical payments to the first wife or substitute the payments with a capital lump sum?

The recent case of Vaughan v Vaughan (2010) brought this issue to light. Mr Vaughan QC and his first wife, Mrs Vaughan, separated in 1981 after 13 years of marriage and subsequently divorced. Since the separation Mr Vaughan paid Mrs Vaughan £636,325 in maintenance payments (£12,000 per year) from 1981 to 1991. Thereafter, he paid her £27,175 per annum to include a periodical payment order made in 1989 of £15,175. The couple had no children.

Mr Vaughan remarried, has two grown up children and lives in a £4.3million property in London with his second wife. Mrs Vaughan lives in a £1million townhouse in London and has no children.

In 2009, Mr Vaughan applied to court to terminate the periodical payments order made in 1989. Mrs Vaughan cross-applied for a capitalised lump sum payment of £560,000 but then dropped her demand to £341,000. Mr Vaughan won and the periodical payments order was terminated.

Mrs Vaughan then appealed and Mr Vaughan, who is worth approximately £5million, was ordered by the Court of Appeal to pay her a lump sum of £215,000 in lieu of periodical payments together with her £400,000 legal bill. It was held the previous court was “plainly wrong” in concluding that Mrs Vaughan could adjust without ‘undue hardship’ following the discontinuation of Mr Vaughan’s periodical payments.

The case of Vaughan unequivocally illustrates that court orders and indeed first wives, cannot be swept aside on a whim. For more information please contact Kate Brooks.