CG22420 - Transfer of assets: between husband and wife or between civil partners: separation, divorce or dissolution: Court Order

Where an asset is transferred by a Court Order made after the date of the decree absolute or after the date the dissolution order was made final, the date of disposal is the date of the Court Order.

This view is sometimes disputed where the parties have approached the Courts for an order to give effect to a prior agreement between them for the division of the assets of the marriage or civil partnership. The Court Order in these cases is called a consent order and the Court follows a simplified procedure. It is sometimes suggested that the agreement between the parties, which precedes the consent order, is a binding contract and so the date of any such agreement is the date of disposal of the assets.

You should not accept this view which was rejected by the Privy Council in the non-tax case of de Lasala v de Lasala 1980 AC546. Lord Diplock stated that

`Financial arrangements that are agreed upon between the parties for the purpose of receiving the approval and being made the subject of a consent order by the Court once they have been made the subject of the Court Order no longer depend upon the agreement of the parties as the source from which their legal effect is derived. Their legal effect is derived from the Court Order.'

This view has been applied in tax cases, for example in Aspden v Hildesley (55TC609) and in Harvey v Sivyer (58TC569). In the latter case, Nourse J commented that it is

`now well established that the legal effect of the provisions embodied in this kind of consent order is derived from the order itself and does not depend on any anterior agreement between the parties.'