COVID-19: To what extent could the pandemic undermine financial orders made on divorce?

We are currently navigating our way through a global health emergency of an unprecedented scale.  With economic activity slowing, it is likely that the impact of COVID-19 will be felt by us all, with many concerned about the possible impact it will have on personal and business finances, and in turn concern about how obligations in financial court orders can still be met.

It is difficult to set aside a court order and the key question will be; whether or not COVID-19 is considered a Barder event (Barder v Barder (Caluori Intervening) [1987] 2 FLR 480).

Can an existing financial order be unpicked?

There are certain elements of a court order which are always variable such as spousal and child maintenance.  If COVID-19 has significantly changed your income position and in turn, your ability to pay maintenance, either at the level ordered or at all, you should first check whether there are any Government schemes available to you.  If not, you should speak to your former spouse to see if a reduced level of maintenance can be agreed.  This should be recorded in writing.  If agreement cannot be reached, and current events are going to make compliance impossible, you may need to issue an application for a downward variation in maintenance.  Court orders are legally binding and you should not simply stop paying.

As a general principle, a financial order in respect of capital such as property, cash, investments and pensions is final.  There are limited circumstances where these orders may be unpicked and may occur if there has been fraud, material non-disclosure, certain limited types of mistake, an appeal on the merits of the order made and a subsequent event, unforeseen and unforeseeable at the time the other was made, known as a Barder event.

Could COVID-19 be a Barder event and will this allow some a second bite of the cherry?

In order for COVID-19 to be considered a Barder event, the pandemic would need to be regarded as unforeseen and unforeseeable at the time the order was made, and something causing significant change.  It should also have occurred within a relatively short time of the order having been made.

The threshold test in Barder is high and it is rare for events to be characterised as a Barder event.  Following the financial crisis of 2008, a party to a matrimonial order was unsuccessful in persuading the court that a financial order should be re-opened after they said it became unaffordable.  Similarly, in order to be successful, a party must show that the financial impact of COVID-19 goes beyond the natural process of price fluctuation whether in houses, shares or property, however dramatic.

Although COVID-19 is already having a profound impact on the global economy, we are very much still riding the COVID-19 wave, and it remains to be seen how the family court will treat such applications.  There is a balance to be struck between the public interest argument that there should be finality in litigation and the fact that each case should be judged on its own true facts and merits.

If a financial order is set aside, the whole matter will be re-determined.

What should you do if this affects you?

You should act swiftly if you think this affects you, as any application should be made promptly.

Open dialogue with your former partner as soon as possible and seek advice from a specialist family lawyer in order that a balanced and reasoned decision can be made as to the risks and benefits of making an application to the court.  Each case is different.

Further information

This briefing note is only intended to give a summary of the subject matter.  It does not constitute legal advice.  Each case must be considered on its own facts.  If you are concerned about the impact COVID-19 may have on your obligations under a financial order, please contact a member of our family team.