When a financial agreement is reached during the divorce process, it is based on a set of facts at a certain point in time. However, what happens if there are changes in circumstances following an order being made? Elizabeth Dowler and Rebecca Silcock, in the Family team, explain when it may be appropriate to vary a financial order.
Under matrimonial legislation, the court has the power to vary certain orders; these include periodical payments (also known as spousal maintenance) and varying lump sums payable by instalments.
• Spousal maintenance
Often when substantive spousal maintenance is ordered, a change in circumstances can give rise to an application for this to be varied. Historically, joint lives spousal maintenance was routinely ordered when one party was a high-earner and the other had been in a more traditional home-maker role. However, over time the amount of income received by both parties can change; for instance the higher earner may have lost their job and now earn far less whereas the other party may have had time to increase their earning capacity. On these facts, the Court may consider it appropriate for this order to be reconsidered if an agreement cannot be reached by consent.
As well as considering whether the maintenance paid should be reduced, the Court can reconsider whether a clean-break could now be appropriate. This can sometimes mean that the maintenance payable is ‘capitalised’ and instead of monthly maintenance, this is paid as a lump sum.
In recent years, there has been a shift in attitudes towards spousal maintenance with the Court now considering spousal maintenance as more of a short-term solution with the aim of assisting the lower-earner to adjust to independence rather than a meal-ticket for life.
• Lump sums by instalments
The Court has the power to vary the timing of lump sum instalments and how they are paid. There is also the power to discharge further instalments and in some cases, even the whole of the balance. This variation application can be appropriate when it was envisaged that significant capital would become available in the future (i.e. a business selling) but this has not come to fruition meaning that the lump sum needs to be reduced or discharged or paid at a later date.
In addition to varying an order, the Court can also hear an application to “set aside” an order. These applications can be made if one of the following grounds can be satisfied:
Non-disclosure of material evidence or fraud
If it comes to light that one party failed to disclose assets to which they were entitled, and these are significant, it can be possible to make an application to Court to ask that the order is set aside and the financial arrangement is re-considered. In reality, this tends only to be cost-proportionate when the asset which was not disclosed is significant in value and also, had the Court been aware of it, they would have made an order that was substantially different.
A significant event has occurred after the order.
This is also known as a “Barder event” and this event must have been unforeseen. The Court may allow a challenge to an order that has been made provided four conditions are satisfied, namely:
o New events have occurred since the order which invalidate the basis, or fundamental assumptions, upon which the order was made. These must be such that if leave to appeal out of time were to be given, the appeal would be certain, or very likely, to succeed.
o The new event happened within a relatively short time-frame.
o The application is made promptly.
o The application would not prejudice third parties who have in good-faith acquired an interest in the property which is the subject of the matter.
If you want to know more about varying your financial order, or setting this aside, please get in touch with our Family team for more information on 01225 750000.