The changing landscape of divorce
The pandemic engulfing the world no doubt will have an unforgettable and lasting impact on people’s lives in numerous ways. The obvious and tangible damage through illness and death is devastating, hard to comprehend and has been well documented.
There are also severe and wide-ranging, indirect consequences caused by the restrictions deemed necessary to control the virus, including job loss, poverty, stress, depression and substance abuse. All of these factors will cause stress on family life, potentially leading to relationship breakdown and an increase in divorces and legal separations in Bermuda.
One example of the clear consequence of the lockdown has been an alarming increase in the reports of domestic incidences. The Royal Gazette reported last week that domestic incidents, including physical and non-physical incidents doubled during the lockdown compared with the previous month. This included not only “domestic violence” against a spouse but also sibling on sibling and child on parent and vice versa.
The police statistics were echoed by the island’s charities and their own experience during the lockdown period.
An editorial in the British Medical Journal stated that immediately before the lockdown, alcohol sales rose by 67 per cent in Britain, with many people subsequently drinking more than normal during the shelter-in-place. The impact of these issues will likely result in an increase in protective orders and potentially state intervention, particularly where there is a risk of significant harm to children.
It has been also widely reported that divorce rates have dramatically increased in China since its government-enforced lockdown was lifted at the end of March. While China releases its full divorce statistics annually only, reports appear to indicate that government offices in major cities have been overwhelmed with record numbers of divorce filings.
The extent to which other countries, including Bermuda, will follow the same trend is yet to be seen. At present, the restrictions make it difficult for a spouse to leave an unhappy or abusive marriage. Moreover, we are only just seeing the Supreme Court reopening in Bermuda to allow for parties to issue divorces.
As restrictions lift, it will start to become clearer how the people of Bermuda tolerated the lockdown and whether it has resulted in more couples experiencing marriage difficulties, subsequently ending up in divorce.
Covid-19 and the worldwide pandemic is highly likely to change many aspects of matrimonial law. Legal scholars will need to reassess how we approach cases in this new era. We will need to consider not only how we interact with clients to ensure safety for all, but specifically how the coronavirus may have an impact on the advice that we give.
Outside of the wider societal issues relating to abuse and how those matters are addressed, one of the significant changes in family disputes will be the financial impact in the short to medium term on separating couples. This may affect both those who already have obtained a divorce and those considering permanent separation from their spouse.
These considerations will include:
• Loss or decrease in income, impacting the ability to meet existing, pre-pandemic expenses
• Economic downturn in business revenue as a business owner and possible restructuring or closure
• Falling housing prices and the inability to sell to release equity
• Volatility in asset portfolios invested in the stock market
• Pension values dropping, and the likely time it may take to revert to pre-pandemic values. (This will be particularly hard-hitting for those who are due to retire shortly and cannot afford the luxury of time for regrowth. The same applies to people who were and are reliant on stock-market investments during retirement)
These factors are not exhaustive, but such changes in a party’s financial position will impact the ability to pay child support, spousal support or reach a fair distribution of assets.
For those struggling to meet an existing maintenance order, an application will need to be made to the court for a variation. The overriding legal principle in such cases is to consider whether there has been a material “change of circumstances”.
Any of the factors mentioned earlier are likely to be held as a “change of circumstances” and the court will consider the circumstances pre and post-change to reach a fair determination.
But what about those people who have recently settled their marital affairs? Many will be wondering if they will be bound by a divorce agreement entered into before Covid-19, when the nature of the assets relied upon to form that agreement has vastly changed, and possibly one’s ability to provide cash or other assets is now considered in a vastly different economic era.
As a general legal principle, the ability to resile from an agreement is extremely difficult and the court would permit one party to set the agreement aside only in very limited circumstances.
During the global financial crisis of 2008-09, the court was flooded with applications from parties who relied on the decrease in business valuations/turnover, house values, share values, etc, as a reason why they should not be bound by their agreement or court order.
While the courts accepted that the global financial crisis was “unforeseen and unforeseeable”, and that in some cases an asset substantially changed, the courts refused to set aside orders or agreements, citing that market fluctuations — just like a change in business or house valuations after the event — was simply not sufficient cause to vary a previous order.
In my assessment, I have no doubt that there still will be applications for adjustments after Covid-19. There is an argument that the scope and the scale of this pandemic can be distinguished from the events of 2008-09, but whether or not the court will be sympathetic is unknown. Only time will tell when an application is brought before the court, and each case will be addressed on its own merits.
In terms of both applications to vary previous orders and applications for new divorces, perhaps the most difficult question for the court will be whether the existing financial circumstances are reflective of the true ongoing position or whether they are impacted only in the short term by Covid-19 — thus debate would occur on what is a “fair” determination of a party’s income or the true value of a specific asset.
In the same way that the pandemic will affect financial orders going forward, similarly it will have an impact on the ability of parties to incur legal fees in litigation.
Alternative-dispute resolution options are becoming increasingly popular and may offer a swifter and more cost-effective way to resolve marital disputes. One such example is collaborative law, which is a pledge to resolve matters amicably, with respect and a commitment not to go to court. The process allows clients to be “in the driver’s seat” and with a greater degree of flexibility to reach an outcome, which may be of better assistance, given the uncertainty around Covid-19.
Of course, inevitably, some cases will need to proceed through the courts and still can be navigated effectively. In either scenario, the matrimonial landscape may be different and more uncertain in the short to longer term.
• Katie Richards is a director and head of the Matrimonial and Family Department at Chancery Legal. This opinion should not be substituted for legal advice and persons are advised to seek their own legal advice
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