THE BLOG
27/11/2013 08:26 GMT | Updated 26/01/2014 05:59 GMT

Divorce Litigation - Lessons to be Learned

After nearly seven years of litigation, Scot and Michelle Young finally received judgment on Friday (22 November 2013) in respect of dividing their finances upon divorce. During that time there were around 65 separate Hearings and Mrs Young allegedly spent an incredible £6.4 million fighting the case.

The case was described by the Judge as "about as bad an example of how not to litigate" as any he had encountered. However, although extreme, lessons can be learned from their case.

Background

That Mr Young was once very wealthy and that the couple had a lavish lifestyle during the marriage isn't in doubt. However, the question the Judge needed to answer was the extent to which that wealth disintegrated during a financial meltdown in 2006. Mrs Young's position was that her husband was worth "billions of pounds". His position was that he was £28 million in debt.

Lesson 1 - Provide Full and Frank Financial Disclosure

One of the reasons why the litigation was so protracted in the Young case is that Mr Young refused to disclose his financial position. In order to reach a settlement on divorce both parties need to know the extent of each other's finances. Parties to Court proceedings have a duty to provide full and frank financial disclosure to each other and to the Court. There are several possible effects of not complying with that duty:

  • If either party suspects that the other is hiding money, litigation becomes more likely as trust evaporates. This means that legal fees increase. There is then the question of who will pay for those legal fees.

  • The usual rule in financial proceedings is that each party must pay their own legal costs. The exception to this is if one person's conduct during the litigation merits them paying for some or all of their spouse's legal fees. The Judge in the Young case has indicated that it is likely that Mr Young's lack of financial disclosure is going to mean that he will need to pay at least some of his ex-wife's fees.

  • If you fail to provide full and frank disclosure the Court may find you in contempt of Court. This is a criminal offence. In January 2013 Mr Young was sentenced to six months in prison for failing to disclose his financial position.

Lesson 2 - Remember that Litigation is a Gamble

Perhaps the most important lesson to take from the Young case is that litigation is a gamble. No lawyer, no matter how experienced, can guarantee what will happen at a Final Hearing. The best that anyone can do is to provide a range of possible outcomes.

One of the defining features of the Family Justice System in England and Wales is the level of discretion that Family Judges possess. This means that there is no set formula for how assets should be divided or how much spousal maintenance ("periodical payments") should be paid. Instead Judges makes a decision according to a series of guidelines set out in statute and by looking at previously decided cases.

The strength of this system is that Judges are able to look at all the circumstances of the case and tailor their decision to each family. The weakness is that there will always be a range of possible outcomes, making it impossible to predict what will be ordered at a Final Hearing.

Lesson 3 - Explore Alternative Dispute Resolution

Given the uncertainty of litigation, it is worth making every effort to reach a settlement without the need to go to Court. For example, by exploring mediation.

There is no guarantee that you will receive more money in a Court settlement than in an agreement reached between the two of you. Early on in the case Mr Young offered his wife £300 million to settle. He now says that it was a joke. However, in any event, Mrs Young refused the offer. She has now been awarded £20 million by the Court.

Lesson 4 - Money Isn't the Only Issue to Consider

You may reach the stage where you must decide whether to accept an offer to settle or to continue litigating in Court. In making that decision you need to weigh up a number of factors:

Legal Costs

If you are going to be using solicitors or barristers you need to calculate how much going to a Final Hearing will cost. Remember, the likelihood is that you will need to meet those costs from your share of the assets.

Moving on With Your Life

Litigation isn't a quick process. From start to finish you're looking at at least a year before there is a Final Hearing.

Stress

Litigation can be a stressful and unpleasant experience. Living with that stress can impact upon your health. The Judge in the Young case commented that both parties' health had suffered as a result of the case.

The Effect on the Children

Last, but definitely not least, you should consider how litigation is going to affect any children that you may have. In the Young case the Judge specifically drew attention to the negative impact the litigation had had upon the children.

Lesson 5 - Don't Dismiss Acting in Person

So, how can such an extreme case involving allegations of vast wealth have any relevance to every day people getting divorced? Somewhat surprisingly, Mr Young conducted the majority of his case without legal assistance. While he was criticised for failing to provide proper financial disclosure, the Judge also said that he performed in Court "with dignity and not inconsiderable skill" in what was "one of the most complicated Financial Remedy cases ever seen in these courts."

Lesson 6 - You May Not Like the Judge's Decision

Finally, don't assume that you'll be pleased with the result of a Final Hearing. After spending £6.4 million and almost seven years of her life fighting this case, Mrs Young has branded the £20 million she has been awarded "a disgrace". Mr young has declined to comment.