The importance of negotiating a divorce settlement reasonably

The importance of negotiating a divorce settlement reasonably

Anyone involved in financial remedy proceedings on divorce should try to resolve the matter by agreement, rather than go through lengthy and expensive contested court proceedings. Obviously, this entails entering into negotiations with the other party, usually via solicitors.

Any good lawyer will encourage their client to negotiate, and the court will expect it. However, it is not enough to simply enter into negotiations. The parties must both negotiate reasonably. And the consequences of failing to do so can be significant, as two recent cases demonstrate.

What is reasonable?

Before we look at those cases, we need to consider what is meant by negotiating reasonably.

The whole point of negotiating is of course to reach an agreed settlement.

And that involves the two parties meeting somewhere in the middle, which in turn means being prepared to settle for less than you really want.

But everyone has a limit beyond which they are not prepared to go. The point is that in most cases there is a range of possible outcomes, none of which can be called unreasonable, but at each end of that range it becomes clear, or increasingly clear, that such a settlement is not reasonable.

It is not therefore reasonable to keep pitching your settlement offers in the ‘unreasonable range’. The other party is never going to agree, and the whole negotiation process becomes pointless.

Of course, the difficulty can be understanding where the limits of what is reasonable lie. And that is where the advice of an expert family lawyer comes in.

Duty to negotiate reasonably

The first case was quite complicated, but for the purposes of this post there is no need to go into detail. It involved a financial remedies claim by the wife, which reached a final hearing last month.

The parties first began to negotiate in June this year, with the wife putting forward a proposal, which the judge did not think was reasonable. The husband responded in July, with a proposal that the judge called “completely unrealistic and unreasonable”.

In August the wife responded to that proposal with a revised offer, that the judge found was equally unreasonable.

In September the husband made an improved offer, which the judge found to be reasonable. However, the wife appears to have dismissed the offer out of hand, and made no counter proposal. As a result, the case proceeded to the final hearing.

The judge found that the wife’s conduct in failing to negotiate reasonably, which he said had “propelled the parties to the expense, both emotional and financial, of a trial” was such as to merit a costs penalty against her. Accordingly, he ordered the wife to pay half of the husband’s costs from the date of his improved offer, in the sum of £38,580.

The judge concluded with this warning to everyone involved in financial remedy proceedings:

“Litigants have to understand that they must negotiate openly, reasonably and responsibly. This means they must pitch their claims in the area the court might award, and they must engage with bona fide open attempts to settle – especially in the run up to trial. If they do not, then they will suffer a penalty in costs.”

Failure to negotiate a divorce settlement in a reasonable way

The husband’s failure to negotiate reasonably in the second case was even more costly.

In this case the husband had taken an unreasonable stance pretty well throughout the case. The judge found that he had failed to negotiate openly in a reasonable way, including failing to accept an offer by the wife in the terms of the final order made by the court. The judge therefore made a costs order against the husband, in the eye watering sum of £100,000.

The lesson to be taken from these two cases is quite clear: negotiate reasonably, or risk the consequences!