Reflections on divorce and financial remedies after lockdown

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Last week we hosted a webinar with guest speaker Max Lewis of 29 Bedford Row, where we discussed financial remedies on divorce and the future for family practitioners after lockdown which Graeme summarises for readers in this update.

The financial impact of the lockdown could lead to a spike in marriage rates, as well as divorce rates. We should not read too much into a surge in divorce filing in Wuhan immediately after lockdown. This is because remote filing is not possible in Wuhan and therefore the filing that took place on the first day resulted from the 3 month wait to leave the house. It is also believed that marital preservation is an immediate response to mortal threat which relaxes once the threat is less acute. People refrain from making major life changes under conditions of extreme stress, uncertainty and threat.

The impact of the lockdown may mean that those who were planning further children to delay. Once the lockdown has ended, there will be a return to social life, and the opportunities for marital infidelity. However, because Covid-19 will be in the community after lockdown ends, there will continue to be much uncertainty.

In order to reopen new cases, there must have been new events since the order which invalidate the basis or fundamental assumption on which the order was made, the events should have occurred within a relatively short time of the order being made, mainly not more than a few months, and the application should be made promptly (Barder). The turning point for the lockdown would appear to have been 22 February, when a dozen Italian towns in Northern Italy closed schools and businesses, so the time frame remains short perhaps back to the Summer of 2019.

Differences in value can arise however through “natural process of price fluctuation” which however dramatic can still fall within this principle (Cornick). This means that “what has soared may plunge and what has plunged may soar again”(Myerson) to the extent that shares that are not liquidated may mean that losses are not crystallised.

Where a settlement provides for a clean break, the Court retains complete jurisdiction until the order is put into effect (Thwaite). If there is some significant change in circumstances since the order was made, the Court may have jurisdiction to adjust a final order (L v L). Where any such revision is made, it should reflect the underlying and original intention of the parties (US v SR)

However, the assessment of assets must be those available at trial (Cowan) and this is the usual rule unless serious injustice would be demonstrated (FZ v SZ). It is entirely predictable that company or property valuers, be they accountants or surveyors, will soon be saying soon that it is quite impossible to put any meaningful figure on the value.

Applications for variation under S31 seem very likely, particularly in relation to income orders. Where orders for sale are being varied, that is likely to relate as much to the  process of the sale rather than the distribution of the sale proceeds.

Traditionally, the approach towards variation was to look at everything de novo (Lewis v Lewis) but the modern approach means that a light touch review is used where appropriate (Morris v Morris).

Issues likely to arise in future cases include earning capacity. Some sectors are more vulnerable than others as we emerge from lockdown. There may be arguments about schools and the payment of school fees. Can schools afford to continue if parents don’t pay fees? This is likely to further encourage use of term orders. Remote mediation seems a greater possibility in the sense that the couple need not be in the same room.

The early signs are that there are downsides to remote litigation, for example, being unable to look people in the eyes. The use of remote litigation is likely to be here to stay for directions appointment. Some of the technology has been a great success including electronic bundles, which may lead to greater e-disclosure and better use of document management software.

For future information or if you have any questions please do not hesitate to contact us.

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Graeme Fraser
Posted in Blog, covid-19, Family Law and tagged , .