How The Coronavirus Could Impact Financial Settlements

When separating couples agree a division of their family assets, it is not uncommon for them to do a deal whereby one person keeps one major family asset and the other retains another asset.

An example of this could be where there is a family business and a matrimonial home with comparable values. They agree that Mr X will retain the business and his income stream and Mrs X will retain the home. Such agreements are often then formalised in a Court order as a final agreement which ordinarily cannot be varied or changed in the future, ensuring finality in litigation.

Coronavirus impact on financial settlements

However, in light of COVID-19, we are not living in ordinary times. Using the above example, Mr X may now have to close his business and, at the time of “doing the deal” with his wife, he would almost certainly not have agreed to sign the matrimonial home over to her, if he had known that a global pandemic could possibly render his business worth next to nothing. It is most arguably an event which undermines the basis of the order itself.

The law says that in certain limited circumstances, final orders may be reopened when new and unforeseeable events have occurred since the making of the order, which invalidate the basis on which the agreement has been made. It may well be that COVID-19 proves to be one of those exceptional events as certainly it is an event that was never foreseeable just a very short time ago.

The Courts are likely to exercise caution to avoid floodgates being opened. However, for financial settlements done in the months leading up to the coronavirus, there are likely to be arguments that they should be reopened and reconsidered.