Generally on divorce or separation, you are responsible for the debts in your sole name and any joint debts, e.g. a joint loan or mortgage, are jointly owned. Any defaults could affect the credit rating of both of you, so it is important not to ignore debts but include them in the financial settlement. Recently the Court of Appeal had to consider a case where the husband arranged a joint mortgage on the matrimonial home to pay off his debts, but his wife, who remained in the matrimonial home fell into arrears and the mortgagee tried to repossess the matrimonial home.
The husband ran up debts and then arranged a joint remortgage of the matrimonial home so that he could pay his own debts off. His wife did not jointly own the debts. In order to proceed with the remortgage, the husband persuaded his wife to put the mortgage in joint names. However, the husband failed to tell his wife that he was having an affair at the time. Subsequently, the wife found out about the affair which led to the marriage breaking down and the couple divorced.
The wife fell into arrears with the mortgage, originally taken out to pay off her former husband’s debts. The mortgagee sought possession of the matrimonial home. The case, Hewett v First Plus Financial Group Plc, went to the Court of Appeal. The Court of Appeal found that the husband’s failure to tell his wife he was having an affair when she was persuaded to sign the mortgage contract amounted to undue influence against her. The Court found that the wife had assumed the husband was as committed to their marriage and family as she was. The husband had effectively asked for her unqualified trust whilst having an affair he was keeping secret from her. The Court of Appeal set aside the mortgage.
The mortgagee can still proceed against the husband’s interest in the property and the Court did acknowledge that the remortgage was taken out to secure payment of debts by the husband only.
If you have any questions about ancillary relief or the ownership of property following divorce or separation, please contact Alistair Dobson or Janet Hopkins on 01858 445480 or James Haworth on 0116 212 1080 now or complete one of the on-line forms. James is a member of the Leicestershire Regional Committee for Resolution, an association of legal professionals working to reduce conflict in separation and divorce.
