Sarah Elliott, Solicitor specialising in Family Law, considers how challenges to financial settlements in these uncertain times might be viewed by the Courts.
Issues surrounding financial settlements are on the increase given concerns surrounding the economic impact of Covid. For those going through a separation and who have been negatively impacted, perhaps due to redundancy or loss of business turnover, they may have problems in keeping up maintenance payments, or adhering to lump sum Orders, which may have been directed by the Court.
Business and asset valuations are proving more difficult within this financial climate, given the potential for dramatic changes in an unpredictable market. Pre-covid valuations may no longer be accurate and could require to be updated, adding to costs and delays in parties’ cases.
The pandemic has had an impact on a range of businesses, especially in travel, hospitality and in close contact services. Add to Covid, the uncertainty looming with Brexit, it is hard to imagine a more precarious climate within which people might have to take decisions as to their financial future.
Some business owners facing a downturn in income may consider it an opportune time to enter into negotiations for a financial settlement whilst others will consider holding off financial discussions to ascertain clarity on what the future holds. Many, however, do not have the luxury of time and need to make decisions sooner rather than later. Currently, homeowners are experiencing a buoyant property market with many houses selling quickly, helped by the introduction of the stamp duty holiday, but this seems likely to change in the near future once the wider economic fallout of the pandemic is felt.
For a minority who have had their proceedings concluded pre-Covid but who as a result of the unforeseen changes in their circumstances have experienced difficulties with abiding by Court Orders, it may be possible to ask the Court to re-consider their position. But this comes with a health warning. Whilst an application to vary could be issued in respect of the likes of spousal or child maintenance payments, it is not clear whether challenges to a clean break settlement will succeed. After the 2008 economic crash, many experienced similar difficulties and such challenges were not successful. Any change of circumstances has to meet the ‘Barder test’ as set out in the case of Barder v Barder 1998, wherein the Court did permit a final Order to be varied where one party had tragically died soon after the final determination of the finances. No reported cases have yet been published in relation to ‘the Covid effect’ so it is unclear whether a court would change the outcome in those clean break cases where the circumstances have materially changed. Lawyers await with interest to see whether any such case is successful, but it would seem unlikely.
If you have a query of a matrimonial nature, please do not hesitate to contact our specialist family team here at Worthingtons Solicitors by email at [email protected] or by phoning our Matrimonial Department directly on 028 9128 2905.
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