Family law lawyers are reporting an increase in the number of inquiries from people hard hit by the economic turmoil caused by the coronavirus who seek to challenge generous divorce settlements following a change in their financial situation.
The coronavirus pandemic has plunged the stock markets into chaos and caused unemployment to rise across the UK, causing problems for some divorced people with large maintenance obligations.
Lawyers have told the Financial Times panic calls from clients who have lost their jobs or who have seen their investment portfolios hit hard by a turbulent stock market. These people maintain that they can no longer afford to meet their support obligations.
Katie O’Callaghan, a divorce specialist at Boodle Hatfield, said it was reminiscent of the 2008 financial crisis when high-wage workers sought to cut support for their former spouses.
“Many people have lost a fortune in the stock market crash and will feel that they can no longer afford the maintenance payments they paid,” she said. “They can ask the court to have these payments reduced or completely canceled.”
She said there were many such cases after the financial crisis when stocks fell sharply and many jobs were lost in high-paying sectors such as investment banking.
“If you have lost a very large part of your wealth or income, the courts should take this into consideration as a” material change in circumstances “when considering an application to reduce or stop payments spousal support, “said Ms. O ‘. Callaghan.
Other lawyers said it was unclear whether the coronavirus would be accepted as a reason for reviewing a regulation and that it would likely depend on the person’s net worth falling.
Mark Freedman, a senior partner at Osbornes Law, said that if a party agreed to a settlement based on the value of their shares and then saw these investments fall in value, they could theoretically go to court to review the settlement. agreement or that decision.
Normal divorce rules allow each party to appeal the final settlement within 21 days, but Freedman says the unprecedented nature of the current pandemic could allow the business to reopen.
“I expect those whose finances are affected and who have recently concluded divorce agreements will go to court for an adjustment,” he said.
An appeal can be made under what is called a “Barder event”, a reference to a legal precedent established in 1987.
But a successful appeal will depend on whether a judge considers the coronavirus outbreak to be an “unforeseen and unpredictable” event, said Freedman. “It is questionable and open to interpretation, but I would expect customers to certainly try, and if one person succeeds, many cases could open the floodgates,” he added.
Myerson’s case tested this principle in 2009, where a husband appealed out of time after his equity portfolio lost 90% of its value in the year following a divorce. In this case, the husband lost his trial after the courts ruled that the event – the global financial crisis – was neither unpredictable nor unforeseen.
Anyone wishing to appeal a late settlement should file documents with the court as soon as possible, lawyers said. They would then have to wait for the justice system to return to normal for their case to be heard.
But they cautioned that individuals should not make the decision to request changes to maintenance payments without serious consideration. The process would involve hearings and the obligation to fully disclose finances. This can be an expensive and time consuming process.
Matthew Brunsdon Tully, partner at Forsters law firm, said he had received dozens of calls from clients who had been affected financially. “At the moment, these people just want to know that we are there for them and can advise them on what to do. I expect there will be a flood of people wanting to reduce payments on time “, did he declare.
He recommended that before applying for a court order, the divorcee should consider a temporary reduction in payments with his former spouse. “You should only go to court to change support payments as a last resort – especially when most of the courts are closed,” he said.
Ms. O’Callaghan agreed, “The court will not kindly look at you if you have been reckless with your money, and it will not cut maintenance payments just to save the high-income spouse from having to moderate his way of life.”
She also warned that a judge will not review any decision to unilaterally reduce support payments.