How has Covid-19 impacted upon financial matters in relation to divorce?

Covid-19 is likely to have a significant impact to many people’s lives, particularly those who are either in the process of divorce or who have finalised their divorce and financial settlement by way of a Consent order which has been approved by the Court.

A Consent Order is a document which sets out the terms of the agreed settlement between the parties. The settlement has either been reached between the parties by agreement or has been decided by a Court at a final hearing. There are certain terms that are contained within a Consent Order which deal with the finances such as payments of lump sums, transfer of property, maintenance for children and spousal maintenance along with Pension Sharing Orders.

If due to Covid-19 your financial situation has now changed and you are concerned about the impact that this may have on any financial agreement reached between you and your spouse, either in terms of a sealed Consent Order (already approved by the Court) or if you are in the process of finalising a Consent Order, it is best to seek legal advice as there are certain steps that can be taken to address this.

Financial Consent Order already sealed and approved by the Court

If you are in a situation where your divorce has been finalised and you are making payments under a Consent Order, for example in respect of maintenance i.e. spousal maintenance or child maintenance and you are the paying party who is now suffering financial difficulties in meeting those payments, there are a number of remedies that can be sought.

Ideally the first step would be to set out clearly in correspondence to the receiving party via their solicitors or directly, your current financial position, for example if you have been made redundant or if you have been furloughed and your income has reduced. It is always advisable to seek the other party’s agreement to any changes in respect of payments before contemplating Court action.

If you are not able to agree between you any changes to be made to the terms of the consent order relating to payments or the timing of payments, then mediation is an ideal solution for both parties as, this is an informal process where both parties are encouraged to seek a resolution with the help of a trained mediator. Please note however, that mediation is not legally binding and you should seek legal advice to document any changes made to the terms of the Consent Order in writing ideally by a solicitor.

If either of the above options fails to rectify the position, i.e. corresponding with the other party and or mediation, then it is possible to make an application to the Court in Form D11 to vary or set aside the terms of the Consent Order.

In light of Covid-19, there would only be one applicable ground and this is what is known as The Barder Principle. This relates to a “new event” that has taken place since the making of the Order. The Barder Order is only meant to be dealt with in exceptional circumstances, of which Covid-19 would appear to be an exceptional and unprecedented circumstance. For example if a business which forms part of the agreed settlement terms has folded because of Covid-19, the terms of the Consent Order could possibly be amended because it could be deemed as an unfair settlement, if for example one party was seeking to rely on the income in relation to that business. In making that Order the application must be made promptly.

There is another alternative, which is to make an application to the Court for liberty to apply under Section 31 of the Matrimonial Causes Act 1973 which relates to the timing implementation of the Consent Order. The Court retains power to conduct this housekeeping exercise without necessarily reopening the case. For example, if one party was failing to take steps to sell the house in order for sale provision within the Consent Order. This may well be an excuse to delay, or for example if one person’s pensions were reduced due to Covid-19.

Spousal Maintenance– if a paying party is seeking variation, for example if they are out of work or cannot maintain the current level of agreed maintenance, an application could be made to the Court for the Court to make a decision. Again as above agreement should be sought from the receiving party first either in correspondence or by mediation before contemplating Court action.

In the process of finalising a financial settlement?

There are cautionary measures that can be taken prior to finalising a Consent order.  Due to the  Covid-19 pandemic, any value of assets will likely be reduced and it may be necessary to arrange re-valuations before finalising any settlement agreement. It is therefore crucial that the parties obtain up to date figures so the Court is working with current figures if you are at the stage of finalising a Consent Order.  This would also apply to assets such as pensions and it would be advisable to seek up to date CETV (cash equivalent transfer values).

Maintenance Pending Suit

This is an interim provision pending settlement of financial arrangements, for example, prior to a Consent Order being entered into. One party would agree the Maintenance Pending Suit and maintenance payments would be made monthly, covering the other party’s costs. If there is a change in circumstances, for example due to Covid-19, it may be worth making an application to the Court, however, consideration would have to be given as to the timing of the hearing being listed in the Court in the current circumstances.

It is understood that even with the current pandemic, if an application is made to vary or set aside a current Consent Order, the Courts are prioritising this as an urgent application, which would warrant it being listed in a matter of weeks as opposed to months.

This article was written by Denise Bullock  of Colemans Solicitors . Denise is a Family Law Solicitor with over 10 years of experience. She specialises in all aspects of Family Law including pre-nuptial agreements, post-nuptial agreements, divorce, finances and children matters.

If you have concerns about any of the issues raised in this article, or for more information, call Denise  on 01628 631051 for an initial discussion or to make an appointment.

Categorised in: Family Law

This post was written by Colemans Solicitors LLP