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I have reached a financial agreement – does coronavirus affect this?

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By Sarah Archibald

After many months and sometimes years of planning and negotiating, you may feel a weight has been lifted when a financial agreement or order has been reached. Often, there are significant compromises to be made by everyone involved, and whilst you may not feel that the order is exactly what you had hoped for, you may feel you can live with the terms agreed. You begin to look forward to moving on with your life.

What happens, however, if, once the agreement has been reached, a global pandemic hits leaving your pension, investments and even the value of your family home significantly reduced? You may feel that the agreement reached simply no longer leaves you with sufficient money to re-house. So, can you backtrack?

The answer to the above does, in part, depend on at what stage your agreement is at. This article will focus, for the sake of brevity, on those cases where a concluded agreement is contained in a financial consent order that has been approved by the Court.

To explore what could happen in these circumstances, we can look back to the 2008 financial crisis for guidance. The (second) case of Myerson v Myerson came to Court in 2009, following a dramatic reduction in the share price of the husband’s company, as a result of the 2008 recession. Mr Myerson sought to appeal against the terms of the order, on the basis that what he had retained was now worth a fraction of that anticipated. In this case, the Court held that share price fluctuation, even if significant, was all part of the risks associated with the speculative nature of the business world. Referring to a previous case (Cornick v Cornick), a case that came to Court in 1995, the Court held that although the 2008 recession was unforeseen, at the time the order was made, the consequences were not unforeseeable. The Court considered that the significant collapse in the share price of the husband’s company was, in itself, nothing more than the natural processes of price fluctuation. The husband’s appeal was unsuccessful.

Although a case is yet to come to Court, at the date of writing this article, that evaluates whether coronavirus is considered both unforeseen and unforeseeable, there are a significant number of arguments to suggest that coronavirus is fundamentally different in nature to the 2008 recession. Whilst some may argue that certain financial institutions should have predicted the 2008 recession, it is difficult to believe that anyone, even a few short months ago, could have predicted the impact that coronavirus has had on the global economy, not to mention everyday life. Some argue that coronavirus has been entirely unforeseeable. Should this be the case, there may be circumstances arising in which you could return to Court to request that an order made should be set aside.

Although this article has focused on financial agreements contained in an order approved by the Court, the same legal principles apply to agreements reached but not yet contained in a court-approved order. In these circumstances, there are additional factors that need to be considered. The first question is whether there has actually been a concluded agreement, and both the cases of Rose v Rose and Xydhias v Xydhias can help shed some light here. If it can be shown that a concluded agreement has been reached, then the person wishing to enforce the agreement may think about applying to Court to do so. It is at this stage that we must question the impact of coronavirus, and all the points highlighted above stand.

There are many wide-ranging concerns arising as a result of coronavirus. You or your ex-partner/spouse may now be faced with unemployment, under-funded pensions or, in the extreme, the death of your ex-partner/spouse. Whilst the Court’s view on the legal impact, upon any agreement/order reached, remains to be seen, it is more important than ever to take early legal advice so as to protect yourself as far as possible in these current times of great uncertainty.

As a final point, it is worth bearing in mind that this article is relevant where a financial agreement has been reached before anyone could argue that the existence and/or impact of coronavirus either was, or should have been, known. Financial agreements reached since the awareness of coronavirus has become widespread are likely to be far harder to challenge.

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