Financial Remedies Application – delay or not to delay, that is the question?

Should you delay court applications until normality resumes?

The social distancing requirements have changed the way we live our lives and, for the most part, we must stay in our homes to stop the spread of the coronavirus. But what if you are in the middle of financial remedy court proceedings, or are about to embark on court proceedings following a divorce?

In an earlier article we set out how the family courts have adapted since the outbreak of the pandemic. Essentially, all court hearings are now remote hearings and the courts are prioritising urgent matters, expecting parties to consider, and then utilise alternative dispute resolution methods.

Should you delay court applications until normality resumes?  

With the fast-moving economic changes that are occurring it is understandable to wonder whether you should wait until the economy has recovered before embarking on stressful and expensive litigation. There will also be concerns about the reducing valuation of matrimonial assets & who will be able to support the family. However, no one yet knows whether this is a blip from which we will swiftly recover, or if it will have far reaching economic consequences.

For any cases where proceedings have not yet been issued, should you wait? The party who was the financially stronger one prior to the downturn, may consider it worthwhile to divorce now when there is less to share, in the hope that better times will come for them after division. Conversely, for the financially weaker party, waiting for better days might be better.

If proceedings are issued now, it is unlikely that the case will come before a Judge for many months. The First Appointment will be dealt with on paper and FDRs will not likely be listed until towards the end of the year. Parties will instead be expected to consider Alternative Dispute Resolution (ADR) if that can be afforded, such as mediation. If you decide to wait, you’ll be behind all of the current adjourned cases in terms of listing, by which time, your financial circumstances could look very different to what they are now in any event.

We suggest you consider your short-term position and needs and compare them to the long-term objective and forecasted position to decide what is best for you . If you can communicate and compromise with your former partner you will both avoid protracted proceedings and costs . If this is not possible you need to speak to an advisor and weigh up what is best for you .

Can you set aside a recent court order which is now worthless?

There will be many who have recently settled their cases or had their cases decided, by the court, on facts which perhaps are no longer the case due to the economic downturn caused by the pandemic. Can you have the order set aside?

The House of Lords case of Barder v Barder (Caluori Intervening) [1987] 2 FLR 480 remains the leading authority in this area. The circumstances of this case were tragic: five weeks after a consent order was made, which stated that the husband was to transfer to his ex-wife the family home, she killed their two children and committed suicide. The order had relied upon the fundamental assumption that the wife and children needed a home for an indefinite period; such an assumption had been immediately invalidated upon hers and the children’s death. Following this, the husband successfully appealed out of time and for the order in respect of the transfer to be set aside.

In reaching its decision, the court devised the ‘BarderTest’, which set out four conditions that need to be met in order for leave to apply out of time to be granted, these are that:

  1. New events have occurred which invalidate the basis, or fundamental assumption, upon which the order was made, so that, if leave to appeal out of time were to be given, the appeal would be certain, or very likely to succeed;
  2. The new events have occurred within a relatively short period of time of the order having been made, that is, no more than a few months;
  3. The application for leave to appeal out of time is made reasonably promptly; and
  4. The interests of third parties have not been prejudiced.

So a new event will allow this , but how is this to be defined and will the courts consider the global pandemic as a “new event” which was unforeseen or unforeseeable (Cornick v Cornick (No 1) [1994] 2 FCR 1189)?

When considering this, we have to factor in the subsequent case of Myerson v Myerson [2009]EWCA Civ 282. In this case, following the financial crisis in 2008, which saw his shares plummet in value from £2.99 per share at the time of the Order to 27p, Mr Myerson appealed against the consent order on the basis that, as a result of the financial crash, he was no longer able to fulfil his financial obligations under the order. He claimed that the financial crisis was a ‘new event’and the Order should be set aside. Mr Myerson’s application was not successful. The court held that the significant decrease in wealth shortly after the making of a court order as a result of the economic downturn was “foreseeable” and did not justify a set aside application; the “natural processes of price fluctuation” did not constitute a Barder event. The bar is, therefore, high.

Whilst it will be argued that a general downturn in the economy is foreseeable and therefore not a Barder event, it could similarly be argued that the catastrophic effect of the global pandemic could not have been foreseeable and therefore could constitute a Barder event. The line is thinly drawn, and lawyers will no doubt be arguing both sides of the coin in the not too distant future.

Our advice is that if you consider that the pandemic has adversely affected your ability to implement an order made within recent months, to take advice swiftly as there may be other avenues open to you, for example using either the Thwaiteor Barrelljurisdictions. Using Thwaite,you may be able to apply to set aside an order which remains executory (i.e. not yet implemented). If there has been a significant change in circumstances since the original order was made, and that order remains executory, the court may permit an application to adjust the original order if, in the circumstances, it would be inequitable not to do so. Using Barrell, you may be able to ask the court to review its decision if the order has not yet been drawn up and perfected (i.e. sealed by the court). All cases are fact specific and you should take urgent advice if you think any of these cases would impact you.

Do property valuation reports already obtained need to be reviewed?

The global pandemic has, predictably, affected the property market. With people being unable to move homes, and with the uncertainty surrounding people’s jobs and businesses, the property market has all but stagnated. As a result, any valuation reports obtained recently for current cases will need to be reviewed and updated before relying on the same for settlements of final hearings.

The current circumstances are leading some RICS regulated valuers to include ‘material valuation uncertainty’ declarations in their reporting and advice. However, in  a recently published RICS article, they have assured that the pandemic “does not mean that some RICS regulated members are currently unable to value, indeed valuation under these circumstances provides a key function to support markets and stakeholders. However, valuations may reflect the restrictions that material uncertainty brings. These decisions are on a case by case basis.” Recently surveyors insurers have been permitting them to give valuations based on outside inspections and we have been speaking to surveyors prepared to do this at this current time.

Lost your job – what if you are paying spousal maintenance?

Following the unprecedented economic fluctuation that COVID-19 in causing, the court will inevitably receive an increase in applications for either an increase or downwards variation of maintenance because parties will have either lost their jobs so require greater financial support from an ex-partner  or conversely, can no longer afford to make payments in line with a previously made order.

Maintenance payments are variable, and the court will look at whether there has been a change in circumstances from the original order when deciding whether to vary an order. A loss of a job due to the coronavirus will likely result in a variation. The court will, however, look to ensure that needs are met, whilst also taking into account affordability. If you are being furloughed and are receiving still 80% or more of your salary this will need to be declared and considered.

Due to the courts prioritising children and urgent cases over financial cases, any court application for a variation of maintenance is unlikely to get heard for many months. This, of course, does not help the payer or the payee now. We recommend that the parties communicate the issues with each other and try to come to an agreement. It is possible for the parties to agree a temporary variation to cover these unprecedent times. Alternatively, the parties should consider mediation or arbitration as a way of dealing with this issue more quickly than using the courts. If you agree anything we strongly recommend this is documented.

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If you are affected by any of the issues raised in this article, we are here to help.