Can Covid impact on your divorce ruling?
THE PAST 12 months have turned the world upside down; the impact on the economy has been profound and it is not expected to recover fully for several years to come. Unfortunately, the implications of this are widespread. In this article, we examine whether a financial settlement reached during a divorce can be re-examined following a drastic change in circumstances caused by the Covid pandemic.
MAINTENANCE PAYMENTS
Ongoing maintenance payments to a spouse can vary due to a change of circumstance. This has always been the case. If someone with a high income preCovid suddenly saw their business collapse, or they became unemployed due to the pandemic, they would be able to seek a reduction in what they are paying. Unsurprisingly, this has been a common occurrence in the past 12 months.
CAPITAL PAYMENTS/DIVISION
On the other hand, capital division (eg lump sum payments to a spouse or the transfer of property) are ordinarily incapable of being varied in the future. Only in extreme circumstances where an unforeseeable event has occurred since the initial order was made may the court be willing to set aside those orders. This is known as a ‘Barder’ event, (named after the 1987 case Barder v Barder).
Recently, a pressing question for family lawyers has been whether a change in circumstance caused by the Covid pandemic is capable of being a Barder event, resulting in a financial settlement being overturned. The threshold for a Barder event is notoriously high (in Barder v Barder the transfer of a house to a wife was reversed after she killed herself and the parties’ children just five weeks after the order had been made). Following the global financial crash in 2008, numerous court applications were made on a Barder basis, but none was successful. The court said the financial crash was part of a normal turbulent economy and was not an ‘unforeseeable event’. So, does Covid fall into Barder territory?
The position has finally been tested in a recent family law case. In this instance the final divorce settlement had been made in March 2020, just a few days after the UK’s first lockdown. The husband was due to pay the wife a lump sum in September 2020, but applied for the original order to be overturned due to the economic implications of Covid, as much of his business interests were in the international hotel sector. The judge said the husband’s evidence showing the impact of Covid on his finances was far too generalised and added that any such application needed to take a long-term view, noting that most commentators believe the world economy will be back to where it was within a couple of years.
This example shows that a case cannot be re-opened simply because of the pandemic and that detailed, specific evidence is required to show why the court order should no longer stand. That being said, if the case had gone before the court with far stronger evidence, the outcome might well have been very different for the husband.
Yael Selig is a specialist in family law with over 20 years’ experience. Her work encompasses the full range of financial issues, from relationship formation (prenuptial, post-nuptial and cohabitation agreements) to relationship breakdown. Lara Myers specialises in family law, including divorce, and advises on the difficult personal and financial issues arising at the end of a relationship. Call 020 3918 2705 or email YaelSelig@incegd. com or LaraMyers@incegd.com