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Divorce settlements and COVID-19
By Katie Spooner, Partner at Winckworth Sherwood
In such unprecedented times, one question family lawyers are increasingly seeing is whether parties to financial orders will be able to challenge the provisions contained within them. Financial orders can cover a number of things ranging from what will happen to the family home to whether one party’s pension will be shared with the other. Once sealed by the court, the order becomes binding when decree absolute is pronounced. That means that even if you have experienced a drop in income, or your business is one of the one in four in the UK that has had to close, that order will apply and if you fail to abide by its terms, you will be in breach of it.
Although the general rule is that parties to financial proceedings get ‘one bite at the cherry’, it may be possible for you to vary the order. For example:
- Orders for spousal or child maintenance may be varied upwards or downwards in response to a change to a payee or payer’s income. The length of time that they are in force for may also be reduced or extended.
- Where a lump sum is payable by instalments, you may be able to vary when those instalments are due or the amount that is payable in each instalment.
- If your order provides that you must sell or transfer assets by a certain date, the dates within that order may be varied (this is particularly relevant to those affected by the current standstill of the housing market).
If you do wish to vary your order, discuss it with your ex-spouse first: can you agree to a temporary reduction in maintenance payments; or, are you willing to allow a lump sum payment to be deferred for a set amount of time? Almost everybody has been affected in some way by Covid-19, and you may find that your ex-spouse is understanding, as long as you are reasonable in your approach. If you cannot agree to a variation, you should try mediating with your ex-spouse. The courts are, understandably, overwhelmed at present and you may find that by engaging in mediation you are able to reach an agreement far quicker (and more cost effectively) than if you were to issue court proceedings.
If you wish to completely reopen your financial settlement because the Covid-19 pandemic has had such an impact on your financial circumstances that you consider your financial settlement no longer reasonable and/or affordable, you will need to satisfy the court that the Covid-19 pandemic is a ‘Barder’ event. This is a subsequent event, unforeseen and unforeseeable at the time the order was made, which invalidates the basis on which the order was made. Most attempts made to set aside orders on a Barder basis do not succeed (for example following the financial crisis of 2007-2008); whether Covid-19 will be considered as such an event will require a test case to come before the family courts.
Everybody has different circumstances and there is no ‘one size fits all’ approach to varying, or seeking to set aside entirely, a financial order. If you are concerned about the potential effect of Covid-19 on your ability to comply with your financial order, you should speak to your ex-spouse in the first instance, keeping an open mind, so that you can try and negotiate through the uncertainty together. Also seek legal advice to consider what options may be applicable to your particular circumstances to help inform your discussions.