Recession And Revision: How A Downturn Can Affect The Divorced
Published on 14 December, 2022 | Alison Fernandes
It might seem that the last few winters have brought successively deeper chills.
In this country, the toll exacted by the Covid pandemic on homes and businesses, for instance, has been compounded by the news that the UK has entered the deepest economic downturn since 2008 (https://www.theguardian.com/business/2022/nov/17/obr-confirms-uk-enters-year-long-recession-with-half-a-million-job-losses-likely).
If the headline announcement by the Office for Budget Responsibility (OBR) last month was not concerning enough, the news that it may cost more than half a million people their jobs has only exacerbated the national sense of unease.
Such a scenario does not just mean bad news for workers but businesses owners too.
The month before the OBR’s warning came the publication of figures from the Office for National Statistics (ONS), which detailed how company insolvencies in the second quarter of this financial year reached their highest in more than a decade (https://www.ons.gov.uk/businessindustryandtrade/changestobusiness/bankruptcyinsolvency/articles/risingbusinessinsolvenciesandhighenergyprices/2022-10-07).
It goes without saying that such a picture can have a pronounced impact on family life.
The fact that money is tight can be the final straw for couples whose marriages may already be under strain.
After the last global recession began to lift, the ONS reported how divorces increased at an alarming rate. During 2012, there were 13 divorces an hour in England and Wales (https://www.bbc.co.uk/news/uk-26070256).
Yet money worries do not necessarily abate when someone has been granted their divorce decrees and agreed the how joint marital assets should be divided.
In some cases, individuals find it difficult to meet the terms of spousal or child support.
When that happens, the person making maintenance payments can apply to vary the terms of that arrangement. Naturally, that can mean hardship both for the payer and the recipient.
It is far from being a theoretical situation.
During the pandemic, the impact of lockdown on companies across a range of industry sectors was so severe that myself and my colleagues were approached for advice by people who had concluded their divorces but seen their finances dwindle thereafter.
Most were business owners who feared for the futures of their enterprises and, therefore, questioned their ability to look after their exes and their children.
At that time, of course, the UK Government had put in place a package of measures in an effort to soften the blow of the coronavirus pandemic on firms and households.
In June, the National Audit Office (NAO) calculated the total exposure as £376 billion, of which £147 billion was given to businesses (https://www.nao.org.uk/overviews/covid-19-cost-tracker/).
That support came to an end in March this year, meaning that companies will have to rely on their own best endeavours to cope with whatever the current recession now throws at them.
Individuals who decide that they really need to vary their maintenance payments must be clear that it is not necessarily a simple process.
Unless a variation in spousal maintenance can be agreed – possibly using mediation – it requires an application to the family court, substantiated by a full financial disclosure.
Even so, a judge deliberating on the evidence needs to consider not just the circumstances at the time the application is made but what they might be in the longer term as well as the all-important needs of the recipient.
That does not mean that revisions are never made. In 2015, Lord Justice Pitchford ruled that it was “imperative” that Susan Wright “go out to work and support herself”, following a successful application by her former husband Ian to reduce spousal maintenance, given his impending retirement (https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2015/201.html&query=(.2015.)+AND+(EWCA)+AND+(Civ)+AND+(201)).
It was a case which underlined how, family law is discretionary. An interpretation of what might be a fair outcome given the facts which are presented might vary from judge to judge.
That is certainly not a deficiency, though. Each case will have its unique circumstances and should be weighed on those. A ‘one-size’ approached definitely does not fit all.
With the current recession likely to be with us for at least a year, I fully expect to see more attempts by former spouses to change the terms of maintenance payments which were settled when they divorced.
That prospect means that payers and payees respectively need to be alive to what that means for them.
Courts will expect those seeking variation to be able to fully justify their claim and to be both fair and realistic in the nature of their requests.
Even recipients who rely heavily on the current level of support provided should consider their options in case a judge rules that a revision needs to be made.