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Covid-19 takes its toll on divorced and separated couples

Alex Carruthers, founding partner at Hughes Fowler Carruthers, considers the impact on couples of the social and economic consequences of the coronavirus emergency.

 

Alex Carruthers, Partner, Hughes Fowler Carruthers


The devastating loss of life caused by the Covid-19 virus and the ensuing global health emergency have dominated media headlines for several months. Regrettably, they will continue to do so for some time to come. As the government fights a strategic war of attrition on multiple fronts to mitigate its spread and minimise its impact, their primary objective has been to facilitate a sharp reduction in human activity and, as a result, save lives. Having put it into deep freeze, they hope that most long-term damage to the economy can be avoided once the recovery begins.

In response, everyone has had to adjust the pattern of their daily working lives and recalibrate their leisure time. But the extreme measures put in place have created unequal levels of hardship. Among those notably affected are divorced and separated couples. For some of them the impact has not only been financial, but also personal, and often both. 

The sudden and dramatic contraction of business activity, the near complete cessation of international travel and an imminent global recession have already been anticipated by sharp falls in global stock markets. The knock-on effect of depressed asset values across different sectors has had a detrimental effect on the financial circumstances of many individuals, who still have sizeable maintenance and capital obligations following their divorce. 

Against this background, much has changed in the lives of those affected in a very short space of time: some divorcees already have, or soon will, become unemployed through no fault of their own, while once-successful entrepreneurs will find that their businesses suddenly face a significant level of painful restructuring in order to survive, or certain insolvency for those that do not.

Together with those divorcees who have seen their investment portfolios diminish, many of these individuals believe, with good reason, that they should not be bound by pre Covid-19 agreements to provide cash to the other party because those agreements were made in what was a very different economic era from the world in which we now live. In essence, they can no longer afford to keep pace with their maintenance obligations. As a result, their existing divorce arrangements will need to be subjected to renegotiation.

Inevitably, some of them have already sought to challenge the divorce settlements to which they are presently committed. Where there has been a material change in an individual's circumstances, different remedies are available: they can apply to the court for a reduction in maintenance payments, or in the most severe situations, they be cancelled altogether.

Although the general rule in divorce is that parties to financial proceedings get only one bite of the cherry, it can sometimes be possible to achieve variation of a capital financial order. In extreme circumstances, the court may be willing to set aside the order made at the time of divorce, which becomes enforceable once the court pronounces decree absolute, and sanction a different capital distribution.

Known as a 'Barder event', referring to the House of Lords case Barder v Barder [1988] AC 20, [1987] 2 All ER 440, this was later defined in Cornick v Cornick [1994] 2 FLR 530 as something 'unforeseen and unforeseeable' which has occurred since the order was made and has fundamentally undermined it.  When dealing with changes in financial circumstances, the Cornick case added a further definition: it must have sufficiently altered the value of the assets to cause a substantial change in the balance of the assets brought about by the order.

In the Barder case, the House of Lords set out four conditions that must be satisfied for a court to consider granting permission to appeal out of time: new events have occurred since the making of the order which invalidate the basis, or fundamental assumption, from which it was made; these events occurred within a relatively short time of the order being made; the application for leave to appeal out of time is made reasonably promptly in the circumstances of the case; the grant of leave to appeal out of time should not prejudice third parties who have acquired, in good faith and for valuable consideration, interests in property which is the subject matter of the relevant order.

While no Barder appeal case has yet been reported in relation to Covid-19, such cases have been reasonably common over the past 30 years and are still measured against the four conditions. Nevertheless, successful appeals using a Barder event are relatively rare. It is therefore impossible to predict how the Covid-19 crisis might be judged in any future appeal.

The global financial crisis (GFC) of 2008-9 might provide a benchmark. As many parties found that their asset positions had changed radically,  there was a glut of Barder applications. But they did not succeed because, in the court's view, markets fluctuate just like the value of individual businesses and shares do. As an indication of the extreme volatility that now prevails, the Bank of England has recently forecast a 14 per cent reduction in the UK's GDP for 2020 and a 15 per cent increase for 2021. 

But in scope and scale, the impact of Covid-19 is of an entirely different order of magnitude. While the GFC hit particularly hard among those who were employed in financial services, the pandemic is having a widespread effect on multiple sectors and jurisdictions. It is more like a 'black swan' event. It therefore remains to be seen whether Covid-19, which currently dwarfs the GFC in terms of its immediate impact, will be viewed differently by the courts. 

Historic data are, of course, always more accurate than any forecast. They show that the GFC and the years of austerity which followed did lead to a divorce spike. In the decade up to 2009 there was a general downward trend in the number of divorces, whereas in 2010 they rose by five per cent.

One indicator of what the UK might expect in the level of new divorces comes from China. In April, the first country to enter into lockdown due to Covid-19 saw its divorce filings start to rise as couples in Wuhan and other Chinese cities emerged from a very strict quarantine.

According to a story that has been widely published in the mainstream media, law firms in the UK are 'bracing themselves' for a similar lockdown-fuelled surge in divorce rates. This always happens, these stories have argued, when people are forced to remain together in a pressure cooker environment, such as over the Christmas holiday period. One newspaper suggested that clients had been contacting lawyers 'in droves' during the lockdown period, 'sneaking calls in while on their daily exercise or food shopping breaks from the house.'

The theme has even stretched as far as the Financial Times, which reported last month that family lawyers are experiencing 'a surge in inquiries from individuals hit hard by economic turmoil caused by coronavirus who are seeking to challenge generous divorce settlements'. Whether, in fact, the anticipated rise in divorce might turn out to be proportionately equivalent to the GFC remains to be seen.  

Beyond the financial shocks to the system, there are further virus-related repercussions for divorcees and separated couples. Although it may be too early to tell whether the reported surge of enquiries will ultimately lead to a huge rise in divorce hearings, some things have already happened in the UK during nearly two months of lockdown that evidence the enormous strain under which some families are living.

For example, the draconian measures taken to mitigate the transmission of Covid-19 are affecting applications for interim maintenance, making them more difficult to implement since levels of spending are significantly depressed. And there has been, perhaps inevitably, a rise in enquiries from divorced and separated couples regarding child arrangements. Access to children – so often a battleground between divorced couples – has been a particularly acute issue because freedom of movement has been so restricted.

When Michael Gove stated on ITV's Good Morning Britain that children under 18 should not move between households and that they should stay in the house they were currently in, it caused such a commotion that he was soon forced to backtrack. The following day, he clarified his comments on BBC Breakfast, saying that children could, in fact, travel between their parents' houses throughout the lockdown. Despite his speedy volte face, we have seen several examples of urgent children applications caused by lockdown, some of which have required emergency injunctions.

Lockdown is also affecting trials and increasing the time taken in divorce proceedings.

Technology has played a big part with remote video hearings being conducted across a broad section of cases as barristers and judges appear 'in court' from their computer at home. During the early stages of lockdown, the courts initially only dealt with only the most urgent matters, but fears of a massive backlog of cases building up, combined with the ubiquitous availability of online technology, created pressure for greater access to online justice.

The courts duly responded. Hundreds of cases have now taken place via video conferencing since lockdown was first imposed in March. As in many other jurisdictions, the Covid-19 crisis has led courts around the world to use video technology in place of face-to-face hearings, using conferring platforms such as Zoom and Skype. The UK's Supreme Court made history by hearing its first appeal that was entirely online.

However, a recent report commissioned by Sir Andrew McFarlane, President of the Family Division in England and Wales, revealed concern among the 930+ survey respondents, who included judges, magistrates, barristers, solicitors and parents who had participated in remote video hearings. The report raised severe doubt about the 'fairness' of video hearings. Undertaken by the Nuffield Family Justice Observatory, the report concluded that many of those involved found it 'extremely difficult to conduct hearings with the level of empathy and humanity' that is normally required.

Notwithstanding the challenges of interim technological solutions, such as telephone and video hearings (where different courts have varying attitudes to the security of applications such as Zoom), lawyers are also having problems in gaining access to judges: understandably, they are still prioritising the most urgent work.

Looking ahead, as lockdown in the UK gradually starts to ease, a complete return to normality in the courts and in people's lives will not be possible for many months, or at least until a vaccine is widely available. Beyond the terrible health consequences, the pandemic will leave an enduring social and economic legacy elsewhere, often with sustained long-term consequences.

Despite the media reports of a huge increase in online searches for divorce lawyers and phones ringing endlessly in their offices, the reality is that doing something about it right now can present problems. For those who are not yet separated, deciding to press the divorce button may be impractical or impossible, particularly when they cannot move anywhere else.

On any view, enforced confinement puts increased pressure on even the best relationships. For those whose relationships have already broken down, or are on the verge of doing so, it must be an impossible struggle. The likelihood is that more people will probably file for divorce post lockdown and examples already exist of the extra tension breaking the camel's back. The most important question for those contemplating a divorce right now: when should they push the button?

14/5/20