Photo credit Markus Spiske on Unsplash

As the BBC reported last week, the global as well as UK financial impact of the crisis cannot be overstated. The IMF is quoted as describing the decline “as the worst since the Great Depression of the 1930s”. In this blog, partner Teresa Davidson examines the impacts that the pandemic may have on the outcomes of divorce proceedings.


Coronavirus impacts on divorce: personal and business

On the ground, our clients are seeing the value of their assets hit by market volatility. The impact on the housing market is as yet unknown, although we are liaising with our professional valuation contacts to progress these valuations where required, taking into account potentially changing market conditions.

For some clients who were considering settling financial issues on the basis of a financially stable business, any possible settlement agreement will now have to be revisited. Many of these businesses face financial ruin, or at least uncertainty. Whereas for some, the pandemic has led to an increase in business, for instance the well-publicised increase in bike sales during lock-down.

For others, the financial security of employment may be in doubt. Many job losses look likely as the full impact of the pandemic hits the real economy following this period of government support.

Photo credit Adeolu Eletu on Unsplash

Coronavirus impacts on divorce: the legal context

Family lawyers advise clients in the context of a legal system which ultimately relies on judges making decisions on financial settlements where parties cannot agree. Those judges have a wide discretion as to what is a “fair” settlement, so there are always parameters within which a reasonable outcome can fall.

In these times of volatility it is imperative that each client’s case is re-visited forensically and each asset re-considered, to establish if settlements should proceed. We are actively working with valuation and other experts to ensure our clients are protected in these challenging times. We want to make sure that any settlement agreements reached, or decisions of the Court, are so far as possible “recession proof”.

Market volatility and risk in divorce: the Myerson v Myerson case

It has always been the case that clients who take the “riskier” assets in their financial settlement, need to be aware that they are accepting this element of risk.

The widely reported case of Myerson v Myerson dealt with the issue of market volatility as long ago as 2009. The Husband who had taken the business shares as the majority of his financial settlement attempted to challenge the settlement by way of appeal when his shares dropped in value dramatically.

The original financial order divided the assets of the husband and wife (valued at the time at £25m) at 57% to the husband and 43% to the wife. The husband’s retained assets were largely made up of his shareholding in his company, which was traded on the AIM. At the time of the agreement the shares were worth £15m. By the time of this appeal the shares were trading at less than 10 percent of the original value.

The Judge rejected the appeal even though it had “dramatic features”. He confirmed that the “natural processes of price fluctuation” should not constitute a Barder event. (Barder refers to a previous legal case, which set the bar for when settlements can be revisited due to unforeseeable and unforeseen events.)

The Judge also referred to four other factors in this case that prevented the appeal succeeding:

  1. The husband, with all his knowledge and experience, had agreed the compromise.
  2. The husband, in attempting to vary the settlement and offer the wife shares instead, was seeking to relieve himself of the consequences of his speculation.
  3. The husband still had opportunities  as “unusual opportunities are created for the most astute in a bear market”.
  4. The husband had already invoked the statutory power of variation concerning the instalments by which he was required to pay capital to the wife.

The Judge went on to add:

“There may be many who are contemplating an attempt to reopen an existing ancillary relief order on the grounds of subsequently encountered financial eclipse. All in that situation should ponder this analytical characterisation and ask themselves whether the events upon which they intend to rely can be bought within either the second or the third category.  Even then they would be well advised to heed the warning that very few successful applications have been reported.”

Photo credit Carlos Muza on Unsplash

Moving your divorce forward during lockdown

Here at Silk Family Law, we are finding that despite the challenges of lockdown, many of our clients still wish to look to the future and move their divorce process on.

Our team is here to do just that, all the while taking care to allow for the current volatility as described above.

It is also worth considering that, in the coming months, the court system may struggle to accommodate all of the remote hearings required. We are therefore exploring where alternative forms of dispute resolution may be appropriate. This might include mediation, arbitration, private dispute resolution appointments and round-table meetings, all of which can occur remotely. These forms of dispute resolution have always been encouraged by the Court, and the Court process can be suspended while they are undertaken. It is inevitable that Judges will be encouraged more than ever to direct parties to existing Court litigation to engage in such processes.

Alternative dispute resolution options for your divorce

We are actively innovating right now, working with clients on alternative forms of dispute resolution, which can continue to take place remotely. Some examples of how we are currently doing this include:

  1. Virtual joint settlement meeting – On one current financial case, we are progressing matters by way of a virtual joint settlement meeting. This involves each party having their own virtual private “room” for advice and discussions with their own legal team, a joint room for negotiations between the lawyers and a virtual “corridor” to enable the parties’ barristers to take time out as they would in a physical office or court setting to discuss the case.
  2. Private financial dispute resolution hearing – On another case, we are progressing negotiations by a private financial dispute resolution hearing. This usually forms part of the Court process, but there is the option for parties to arrange this privately without Court involvement. This involves the appointment of their own choice of “Judge” (usually a senior barrister or retired Judge) to engage in a form of Court-led mediation.
  3. Arbitration – Another financial case will be resolved by arbitration, where the parties appoint an independent arbitrator (essentially a private Judge) to make a decision – in a similar way to how a Court based Judge would determine the issues. The advantage of arbitration is that the parties can control the venue, timing and who hears the case. Virtual, written or face-to-face arbitration can be considered, giving our clients options during a period when the Court system may be under some pressure and may not be able to accommodate final hearings for some time in many cases.

In many other cases we are continuing to act for clients who wish to take action and we can find bespoke solutions to suit each individual situation.

Photo credit Scott Graham on Unsplash

At Silk we are also actively planning for when we can return to work in a more usual setting. With offices in Newcastle, North Yorkshire and Leeds each with multiple meeting rooms, we are planning for a return to face-to-face meetings with appropriate social distancing where necessary.

As our clients seek to carry on with their lives during this unusual time, our whole team is working with them, and with their other professional advisers, to ensure we can achieve the best possible outcome for them.

If you would like to discuss any aspect of divorce, you can contact me on or call me on 07712 937747.

Photo credits: Markus Spiske, Adeolu Eletu, Carlos Muza & Scott Graham on Unsplash.