What Does the Financial Crisis Mean for My Divorce Settlement?

I recently came across a Twitter thread about a recent divorcee who was lamenting the financial agreement reached with their ex-spouse. The agreement had resulted in this aggrieved party retaining a substantial amount of cryptocurrency whilst their ex-partner kept the liquid assets. The reason for their grief was that cryptocurrency had taken a nosedive.

It is a theme that is more common than might be expected. Family courts hear many arguments after the event that, in fact, the basis for a financial order is no longer valid owing to circumstances which may have been entirely outside of the control of either party.

What are the options for these disgruntled individuals? Well, some end up back at court hoping that the financial matters can be re-assessed and adjusted more in their favour – these cases are commonly seen following an economic crash.

It is therefore anticipated that, with the recent turmoil with the financial markets, it is only a matter of time before cases are brought to court whereby one party argues that, for example, their business has gone under; their pensions have plummeted; they can no longer get a mortgage etc. How might the court treat this is an unknown – however, there are some past decisions we can refer to and ‘glean’ that the court may decide similarly.

In 2021, this issue came before the court with regard to the financial crash of early 2020 – times that feel incredibly long ago. A husband argued that the order for him to pay several lump sum payments to his wife, in exchange for him keeping his business, was no longer fair given that his business had plummeted in value (BT v CU [2021] EWFC 87).

The legal argument arises from the case of Barder (Barder v Barder (WA v Executors of the Estate of HA & Others) EWHC 223 (Fam)) and requires that, for an order to be set aside, there must have been an unforeseen and unforeseeable new event, invalidating the basis on which the original order was made.

It was decided in the 2021 case that COVID-19 was not a ‘Barder’ event – although a global pandemic was most likely not anticipated by the husband and wife, that was irrelevant – the relevant question was whether it was foreseen/foreseeable that a global financial crisis would arise: to which the answer was ‘yes’.

At least on the basis of this precedent, it seems highly doubtful that the court will consider that the financial crash is sufficient in itself for an order to be set aside. However, each case is different and independent legal advice should be taken. There may also be steps to be taken in ongoing financial remedy cases, such as distributing risky assets equally, delaying a pension report or otherwise.

Ready to take the next step? Talk to us in confidence and find out where you stand. Our team of divorce and family law specialists – in London, Milton Keynes, Bicester and Watford – can advise and guide you from the moment we start working with you. Get in touch – we’re here to help.

This article is intended for the use of our clients and other interested parties. The information contained in it reflects the author’s view and is believed to be correct at the date of publication. However, it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional legal advice.