Case study: Are the economic consequences of COVID-19 enough to invite a second look at the division of marital assets?
Mr Justice Cohen gave judgment in December 2020 in response to a variation application made on behalf of a husband. The husband argued that his assets were affected by COVID-19 and that the original financial order that had been made in March 2020 should be varied.
The original order provided that husband pay the wife £64 million, which comprised of the matrimonial home mortgage free, and a lump sum by instalments. The Judge had suggested that some of the assets to be transferred to the wife were in shares and not cash, but the husband declined this option. The Husband chose the timescale for payments of the lump sums.
In September 2020, before the first lump sum was due to be paid to the wife, the husband made an application to the Court to vary the order that had been made as to quantum and timing, or to set aside the lump sum order. He argued that his assets were negatively affected by the economic consequences of the COVID-19 pandemic and asked the Court for permission to revalue all his assets, but this application was refused.
Whilst the judge accepted that the husband had undoubtedly had some assets that had been negatively affected by the pandemic, the husband’s interests were so varied it was unclear as to whether there had been a collapse in his global fortune overall.
The judge indicated he couldn’t allow an application to vary on macro-economic grounds “it is not sufficient for husband just to invite the court to look to the general global financial situation”. The husband had only made general statements about his assets and did not provide enough evidence to support his application.
The judge also indicated that the long term situation had to be considered as well as the short term, noting that major stock market indices are now at a high level and many commentators believe that in the next couple of years, the world economy will return to its pre-pandemic position. The situation is changing all the time and hence drawing a line in the sand 6 months after an order is no fairer than drawing a line in the sand 2 years after an order.
In short, we can note that it is not possible to use the global pandemic generally as a means to re-open financial settlements. If an application is made before the court it should be specific in terms of how the pandemic has fundamentally changed a person’s financial situation to such an extent that they cannot fulfil the terms of an existing order, and presumably, that their financial situation is not going to recover any time soon. Further, any application will need to be supported with sufficient evidence.
It is worth noting that this application was a request to re-visit the distribution of marital capital, which should be distinguished from an application to vary a spousal maintenance order. To apply to vary a spousal maintenance order however, the same criteria will apply in that there will need to be a significant change in financial circumstances from when the original order was made, and there will need to be supporting evidence.
If you are currently paying or receiving spousal maintenance pursuant to an order of the court and would like advice as to whether it may be possible to vary this, please contact one of our Trethowans’ Family team today on 0800 2800 421 or contact us here to arrange a confidential free consultation to discuss your options.