For those going through financial proceedings as a result of relationship breakdown, you may be concerned about the impact of COVID-19 on your settlement and your ability to meet financial obligations under any potential court order.
Adjourning Court Hearings
Whilst the President of the Family Division has indicated that Family Courts are “open for business as usual”, many cases are being adjourned either by the court itself or on an application by either party to request an adjournment. Remote hearings are being held on a variety of platforms. Myerson has had direct experience of these hearings being conducted through skype or telephone conference facilities.
An application for an adjournment may be appropriate where there needs to be a joint valuation conducted on a business or property, or when advice needs to be taken in relation to pension sharing. Currently, it is not possible to arrange an internal inspection of an occupied residential property by a RICS surveyor. Nor would it be possible for a forensic accountant to place a reliable value on a business which may have been subject to a downturn in profits as a result of the lockdown restrictions.
In relation to Orders which have already been approved and sealed by the Court, it may be possible to either apply to vary the terms of the Court Order, or to seek advice as to whether you could apply to appeal out of time and set aside the original Order.
Application to Vary an Existing Financial Court Order or to Apply for Permission to Appeal a Court Order Out of Time
Many parties will now be concerned that recently concluded cases no longer provide a fair and reasonable settlement as the COVID-19 pandemic has caused widespread economic uncertainty. What might have seemed reasonable a few weeks ago may no longer be affordable.
The Court has power pursuant to section 31 of the Matrimonial Causes Act 1973 to vary the following orders:-
- Maintenance pending suit and any interim order for maintenance for a spouse
- Any maintenance order
- Any secured maintenance order
- Any provision for payment of a lump sum by instalments
- Any deferred order for a lump sum by instalments
- An order for sale of property
- A pension sharing order
When exercising its powers to vary, the Court will look at all the circumstances of the case, with first consideration being given to the welfare of any child of the family under the age of 18. The circumstances of the case shall include any change in circumstances in any matters to which the Court was required to have regard when making the order to which the application relates.
Varying Maintenance Payments
Spousal maintenance payments may no longer be affordable for the payer who may have lost employment or may have been placed on furlough. Equally, the payee may have encountered financial hardship as a result of losing a job or being placed on furlough.
The Court has the power to temporarily suspend spousal maintenance payments or increase payments to meet needs. W v W [2009] highlighted how the court will only terminate maintenance payments when satisfied the recipient will not face undue hardship. The Court may reduce spousal payments to a nominal amount of £1, with increased maintenance payments to become effective once the paying party returns to work.
Varying an Order for Sale of a Property
Parties can apply to vary orders relating to property. For example, a party may wish to delay the sale of the family home until after lockdown, or where a party intended to retain the family home but is no longer financially able to pay for this, the Court may make a variation to order for the sale of the property.
Varying a Lump sum Order or Setting Aside a Financial Order Entirely
There is no statutory power to vary a lump sum order, only to vary the timing of payment of a lump sum. However, the Court does have the power to order vary a lump sum order payable by way of instalments. If the COVID-19 outbreak has caused substantial damage to a business so that the payer is not able to afford to pay the lump sum ordered or pay spousal maintenance at the level ordered, the payer could potentially apply for permission to appeal out of time to set aside the order upon the basis that the COVID-19 outbreak is an unforeseen event which has fundamentally changed the premise upon which agreement was reached. It could be argued that the COVID-19 outbreak represents a Barder event.
It is not known to what extent such applications will be successful, as previous cases brought on the basis of a Barder event have rarely succeeded. However, we have never had a COVID-19 pandemic before, and this event may have affected the values of the businesses, pensions or properties so catastrophically and unforeseeably that such an application may well be successful.
The Court may be more willing to accept temporary variations to Orders and will be hesitant to make permanent variations when the long-term economic effect of the pandemic remains so uncertain.
As with every case, the costs of a Court application must not outweigh the benefit which is sought. Before a Court application, negotiations between solicitors should be attempted to try and determine a temporary variation by consent. These cases are extremely fact-specific and if any party is concerned about their financial settlement, then legal advice should be sought.
Our expert Family Team are here to support you through the COVID-19 outbreak and can offer comprehensive and reliable advice on your finances. Contact us today on 0161 941 4000 or email us at lawyers@myerson.co.uk.