Covid-19 -v- Financial Arrangements in divorce

How will the Covid-19 pandemic impact on settlements which are being negotiated and those recently concluded?

The Covid-19 pandemic represents an unforeseen event and the repercussions will have a significant impact on society. For those who are going through divorce/civil partnership and financial remedy proceedings there will be worries about how the pandemic will impact on settlements which are being negotiated and also for those recently concluded.

Maintenance

Certain sectors of the economy are already facing cuts to income and redundancy and so for many, concerns about paying and receiving maintenance are likely. For those already in proceedings budgets may have to be re-written or capital provisions adjusted. In cases where maintenance provisions have already been settled and a change of circumstances follows, it must be remembered that maintenance provisions are always variable. Typically, where there has been a loss of income, payers may seek downward variations and payees upward variations or the capitalisation of all their outstanding maintenance provision.

Valuations

A critical requirement to reaching fair settlements is having reliable valuation reports be it for properties, businesses, pensions, shares or other valuable items. It is based on agreed or reported valuations that reports on tax can be commissioned. With the economy likely to take a hit whilst we ride out the pandemic it may well be that assets have to be re-valued and divorce settlement strategies re-assessed. Assets once considered to be the golden goose that lays the golden egg could now be a toxic money pit.

U-turns

Although maintenance orders are always variable, where agreements have been reached in respect of capital (e.g. house, cash and investments, pensions) these are normally final save for a limited number of circumstances such as fraud, non-disclosure and appeals. A further circumstance where a settlement can potentially be reopened is following a “Barder Event” (named after the case of Barder -v- Barder). A Barder Event is where something happens which undermines a settlement and was unforeseen or unforeseeable. When seeking to rely on a Barder Event and appealing an Order out of time, the Court set out 4 criteria which had to be met and which are as follows:

  1. That the new event which had occurred invalidated the basis for the order or the fundamental assumption on which it was based, so that any appeal was certain or very likely to succeed.
  2. The new event had taken place within a short time period after the order was made (there is no specific guidance as to what this means, but it is generally understood that it should ideally be measured in weeks, not months, and in any event be less than a year at the outside).
  3. That the application to appeal out of time had been made promptly after the event took place.
  4. That granting leave to appeal would not prejudice any innocent third parties (e.g. if a house had been sold to an unconnected third party).

Cases where the Barder principles have been applied involve:

  • Changes in the value of assets.
  • Changes in employment status.
  • Death.
  • Remarriage or cohabitation.
  • Changes in housing needs.
  • Inheritance.

The Courts until now have been keen to stress that it would be rare for events to meet the Barder threshold and indeed few cases have, but we may now see challenges following Covid-19, especially where basic needs can longer be met.

If you require further information or advice on your financial arrangements please do contact us. We remain open and are here to help you. 

CONTACT KIRAN

If you would like more information or advice relating to this article or a Family law matter, please do not hesitate to contact Kiran Beeharry on 01727 798047. 

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Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them alone. You are recommended to obtain specific advice in respect of individual cases.