Groves & Robertson say: ‘Where COVID-19 has impacted on financial circumstances, we are likely to see far more applications being made to vary downwards any spousal maintenance due to a significant change in circumstances.
‘Businesses in particular may be severely impacted by the virus—if share capital is significantly reduced, there will be less liquidity in the business, which may lead to a delay in capital payments being made. Some companies may even go bankrupt, leaving the current maintenance and capital provision arrangement impossible to meet.’
Groves & Robertson advise that all open offer letters based on pre-pandemic market valuations ‘be reviewed swiftly’ to ensure they remain realistic in light of current circumstances.
‘Safeguards for the party making payment may include building review clauses into the consent order, for example, the order could specify that, if the paying party is made redundant or their earnings drop below a certain level, maintenance will be reduced,’ they add. Other suggestions include a bar under s 28(1A) of the Matrimonial Causes Act 1973 to prevent the extension of the maintenance term, using a percentage of assets rather than specific figures (although this could be risky when the economy improves) and making it clear in the consent order that the agreement was reached during the time of the COVID-19 crisis.
Philip Way considers whether the pandemic could be seen as a Barder event, invalidating any existing court order, Barder v Barder (Caluori Intervening) [1987] 2 FLR 480. The most relevant precedent is that of Myerson v Myerson [2009] EWCA Civ 282, [2009] 2 FLR 147, he says, concerning the global financial crash of 2008. However, this case was highly fact-specific.
Way says: ‘The particular questions that arise when considering whether the coronavirus pandemic represents a Barder event are these: whether the pandemic is unforeseen and unforeseeable, so as to be distinguishable from the financial crisis of 2008, and whether the economic impact of the pandemic on a party to a matrimonial order is such so as to take their position beyond the natural processes of price fluctuation, however dramatic.
‘The husband in Myerson found the court unsympathetic to his plight in March 2009. There might just be a party to a recent order who feels that the effect of the pandemic on their particular circumstances merits an attempt at set aside but they will have to be bold.’
