Whether they are negotiating or litigating, couples who divorce often reach a brick wall when trying to sort out their finances. Potential sticking points include when someone thinks they should keep an inheritance from their side of the family, or that pensions accumulated before marriage should be ignored. These feelings often accompany a strong belief that the “other side” has spent recklessly and inappropriately, and should therefore be “punished.”
Several reported cases have dealt with the concept of ‘add back’. Add back is an analysis by a judge whether the money spent recklessly should be put back into the equation and/or that the person who has wasted it should suffer in the financial settlement.
After one particularly colourful recent case, the High Court Judge took the view that if somebody has been difficult and a spendthrift during the marriage, then expecting them to be different in the period after separation is unrealistic. In other words, we take our husbands and wives as we find them, and that carries through to the divorce financial settlement.
In the case of MAP v MFP [2015] EWHC 627 (Fam), a 40 year marriage had resulted in total assets of about £25 million. Together, the husband and wife had built up a successful property management business. The husband held 95% of the shares and the wife 5%.
The wife wanted the money spent by the husband on drugs and prostitutes over a two year period (in the region of £250,000) to be added back into the pot so that it could be shared by her.
She also said that the husband had wasted money on property improvements that had not increased values. She argued that the money the husband had spent on drug rehabilitation should also go back into the equation.
The wife’s arguments were rejected on all three counts; money spent on property improvements was not a deliberate over spend, but down to the husband’s flawed judgment. The drug rehabilitation was the husband trying to put things right because he was ill and needed treatment and the £250,000 spent on drugs and prostitutes would not be added back on the basis that it had again been a product of the husband’s character.
The judge said it would be wrong to allow the wife to take advantage of the husband’s abilities that had made the business so successful and valuable, while not taking a financial hit from the personality flaws that led to his drug addiction.
Many legal commentators consider this to be a harsh decision in the circumstances. If there had been significantly less than £25 million to share, then perhaps the judge would not have been able to ignore the impact of the husband’s faults.
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