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Kara Swift
Kara Swift
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Date:18 JUN 2007

(Family Division; Peter Hughes QC sitting as deputy judge of the High Court; 18 June 2007)

The husband and wife divorced after a 17-year marriage. During ancillary relief proceedings the parties entered into an agreement, which was incorporated into a court order. This provided, inter alia, that the husband would pay to the wife three lump sums arising out of the sale of their software business to another company, of which the husband became an employee. The second and third lump sum payments to the wife relied upon the husband receiving two payments from the employer company under the terms of the sale agreement, and linked to his service agreement. If they were not received by him in full the wife's payments would be rateably reduced.

The husband resigned from his employment with the employer company and, in accordance with provisions of the sale agreement and the service agreement, did not therefore receive his second payment. In consequence of this the wife did not receive her third payment. The effect was to reduce the wife's overall share of the assets, which should have been just under 50%, to 45%. The wife argued that the husband's liability to pay the third tranche would only be extinguished if he was deprived of his right to the second payment under the sale agreement, and not in circumstances where he had chosen to terminate his employment. If she was not entitled to the third payment in full, she was entitled to half of the available assets or a rateable adjustment of the second and third payments.

Relying on a separate provision of the agreement, the husband counterclaimed for half of the shortfall arising out of the winding up of the software business. Clause 8 of the agreement provided that any shortfall arising out of the winding up of the business was to be contributed to equally by the husband and wife, provided that the shortfall was one for which either party was personally liable.

It was the duty of parties and their professional advisers to ensure orders were drawn up with care so as to ensure that they clearly provide for what the parties have agreed.

The intention of the order in this case was to provide parity between the parties. For the purposes of rateably reducing the payments to the wife, the husband's payments from the company should be treated as one: this most fairly reflected the meaning and intention of the order. The husband was liable to pay the wife a further lump sum of £81,752 plus interest.

On the facts and evidence the shortfall was not one for which the husband was personally liable and his claim under clause 8 of the agreement would be dismissed.