Divorce in lockdown: is it possible?
Courts are prioritising urgent cases and with the major impact of coronavirus on the economy, housing market and personal finances, many pushed to thoughts of divorce may be wondering whether now is a good time.
Emma Davies, partner and specialist divorce solicitor in Nelsons’ family law team, answers key questions for separated partners during the coronavirus pandemic:
Can I still get a divorce?
Many court staff and judges are working from home and most hearings are being done remotely, so it is still possible, but couples may experience delays. This is because the courts are prioritising urgent cases, such as those involving domestic abuse or child protection.
However, in most divorce cases, a hearing is not needed. Couples will only have to go to court if disputes regarding financial matters or children can’t be resolved by the separated couple or their lawyers.
Financially, is now a good time to get divorced?
With the impact the Covid-19 pandemic is having on the economy, many people may find themselves in a financially less advantageous position. For some, however, a financial downturn could be seen as an advantage when it comes to divorce and securing a more favourable financial settlement.
Due to the coronavirus outbreak, many assets may well have diminished in value. Businesses may not be considered as valuable, investments are likely to have suffered, and some pensions will now be worth less than they were only a few weeks ago.
For the party to a marriage who is – or was prior to the pandemic – in a stronger financial position, the answer to the question ‘should I divorce now’ might well be yes. Hopefully, the economy will bounce back, as will the value of your assets, leaving you better off than if you had divorced in more stable times.
Although the timing might benefit you, it may not benefit your spouse, who is likely to object to a final financial settlement being reached until some form of normality has resumed.
Additionally, the unprecedented uncertainty brought about by Covid-19 will mean the court will likely exercise extreme caution when making final orders and dividing the marital assets until the storm has passed.
Every case is different, and it is important you seek advice tailored to your specific circumstances.
What happens if the family home struggles to sell?
At the end of March, the government suspended the housing market as estate agents closed their doors and banks withdrew deals. As a result, homeowners trying to sell their properties saw the number of potential buyers decline. This, of course, could throw settlements into jeopardy and possibly increase a couple’s capital gains tax liabilities when they do end up reaching a deal.
I reached a financial agreement prior to the pandemic, which I believe is no longer fair. What should I do?
Anyone embarking on divorce proceedings will be advised that the only way any financial agreement can be made legally binding is to ensure the agreement is contained within a consent order endorsed by the court. If you are unable to reach an agreement as to how the assets of your marriage should be divided, a judge can impose a final financial order setting out who gets what at the conclusion of financial remedy proceedings.
Without a financial order made either by consent or by a judge, the parties’ financial claims against each other remain live. A financial order is the only way to ensure there is finality and that neither party can make a further claim against the other.
In many cases, one party retains the ‘copper-bottomed’ assets, such as the family home or cash savings in a bank, while the other may opt to keep the family business or riskier investments. Prior to Covid-19, those assets may have had broadly similar values. However, the effect of the pandemic could now see the value of the business and the income derived from it diminish significantly, along with grave uncertainty as to the value of other investments.
In such circumstances, the party retaining the riskier assets would not have agreed to such a deal had they known that a global pandemic with such disastrous economic consequences was just around the corner.
Orders for maintenance payments or lump sums that are to be paid in instalments can be varied by the court in some circumstances. However, all other financial orders made by the court are un-variable. The possibility of appeal is time limited and will only succeed if the judge has erred in law.
An application can be made to the court to ‘set-aside’ an order, but only if there has been a significant mistake or material non-disclosure. This will only be relevant for a small number of cases and probably not as a result of Covid-19.
Is the coronavirus pandemic a ‘Barder’ event?
A Barder event is one that is unforeseen or unforeseeable, which fundamentally undermines the financial order that has been made. It is rare however.
A Barder event cannot simply be a significant change in the value of an asset for any reason. For example, a stock market crash or recession would not constitute a Barder event. It has to be something more than that.
The effects of Covid-19 on the global financial system are unlike any recession. So far, we do not know for certain what the implications of the pandemic will be. One thing is for certain; there’s a strong argument to suggest the events leading up to the circumstances in which we all now find ourselves living were reasonably unforeseeable and therefore, a Barder event.
What is also certain is that the subsequent effect on the economy, housing market and businesses is likely to undermine some financial orders made in the months leading up to the coronavirus outbreak.
What remains to be seen is how the courts will deal with this. Judges will be reluctant to open the floodgates to numerous cases being reopened, but there is no doubt that something will have to be done by those who have been adversely affected through such an unprecedented global health emergency unlike anything we have seen in our lifetimes.