Getting Blood out of a Stone – handling the uncooperative ex-spouse.

Sadly this is not an uncommon scenario; following hotly contested divorce proceedings, an order is made that requires one spouse (for arguments sake, the husband) to make financial payments over a period of time to the other.

Everyone breathes a sigh of relief that the worst of it is behind them, and the parties can start to build their new lives.

But then the first payment doesn’t materialise, so legal advisors are re-engaged, and strongly worded letters sent. These are met with one (or a sometimes all) of the following; denial, claims of impecuniosity, claims of appeal (outside any permissible timescale), or a paltry part-payment.

Discussions are then had about what steps can be taken to force or coerce the ex-husband to comply. After all, it is a court order - people are supposed to do what they dictate.

Often the affairs of the ex-husband are complex, some might say purposefully opaque. If the wealth was merely a large pile of cash in a bank account there would have been no need for delayed, staged payments. In the cases we often deal with there will be a privately owned and operated business, which the experts in the divorce proceedings valued at significant sums, but now that we look at enforcement there is no easy way to realise it.

This is where a Court Appointed Receiver can help. The Court has the power, in relation to any debt, to appoint a Receiver over a debtor’s affairs where a judgement has not been complied with. This is a very draconian step and the Court recognises this by only making such appointments where it is content that to do so will not provide disproportionate damage to the debtor or any
other stakeholders.

However, if you can satisfy the Court of proportionality, the advantage is that it is a very flexible weapon in your armoury. Firstly, it sounds dreadful, so often the threat alone brings about payments. Secondly, it falls outside the regime of the Insolvency Act 1986 and its many revisions. This means there is a huge amount of discretion available to the Court (and therefore the applicant) in respect of the powers and reach of the Receiver.

For example, it is possible to only appoint a receiver over certain assets. This can be helpful where you perceive that a defence levied against the application on the grounds of proportionality might have merit. If in fact one or two of ex-husband’s high-value assets would be sufficient to meet the payments required, you can limit the order to those and ease any potential concerns about over-reaction.

At the other-end of the scale, it is possible to grant the receiver power over all assets of the ex-husband. This can be particularly useful where the most valuable asset of the ex-husband is his shares in a private limited company. The reality may be that selling those shares out from under him will be hard and realise minimal value but those same shares provide the power to appoint and dismiss directors and hold the board to account over the payment of dividends etc. All of which tends to focus the mind.

Another fringe benefit is that the Receiver is an Officer of the Court and therefore has a position of impartiality when dealing with both sides which can be tremendously helpful to unlock
tricky situations.

We find that this is often the crucial part. For example, in a recent case, whilst we were appointed over all of the ex-husband’s assets, we never actually sold any of them as the reality of our appointment and the effect that it would have on ex-husband’s life and business was sufficient for him to make payment of all outstanding awards, costs and interest direct to the wife, just to get rid of us!

Simon Lowe, Partner

Milsted Langdon