Coronavirus Impact on Businesses and Final Orders
What could the impact be on child and spousal maintenance payments?
In light of the recent COVID-19 outbreak, many business owners will naturally be concerned about how to comply with court orders and particularly, being able to make lump sum payments (which can be substantial) and spousal maintenance payments which they may have been ordered to by the court.
Since the recent Government announcements, we have already had a number of enquiries from clients who have recently settled their matrimonial finances by consent or have a final order from the court to comply with.
Specifically, individuals who are working in the leisure industry, may be facing a situation where their business is closed or struggling financially, meaning that they are either unable to take the same level of income that they were (which in turn may impact on their ability to pay spousal maintenance) or make lump sum payments.
It is understandably a very worrying time for business owners – there is a high degree of uncertainty as to how long businesses are either going to be shut as a result of the ongoing pandemic or operating to a lesser extent.
If you are a business owner and are concerned about meeting your obligations under a court order, you need to consider that first and foremost, court orders always legally binding. There are however legal steps that can be taken if you are genuinely facing a situation where you cannot comply with a court order.
Variation of Spousal Maintenance
If you become concerned about being able to meet your spousal maintenance liability then you should always take legal advice from a family lawyer as to your options. It may be looked on unfavourably by the court if you were to unilaterally or simply stop paying your spousal maintenance, even in a situation of financial struggle so take advice on whether this is sensible. There should always be transparency and you would need to consider the following steps:
- You can open up a dialogue with your spouse or former spouse. You can agree alternative payments in the interim and should do so in writing. Your solicitor should draft and send a letter to your spouse, former spouse or their solicitor to identify the issue and provide evidence as to why the spousal maintenance order cannot be complied with and what is being proposed going forwards.
- You always have the option of making an application to court to vary the spousal maintenance order downwards or alternatively the term of it. These applications do need dealing with properly, all of the facts need to be considered and legal advice obtained as to the risks and benefits of making such an application.
Setting Aside an Order
If your business comes into financial difficulty and you cannot meet a lump sum payment as a result of the coronavirus outbreak, you have the option of applying to court to “set aside” the order on the basis that there has been what is known as a “barder” event (which is a significant and unforeseen event which could not have been considered at the time of making the order).
The difficulty at the moment is that as this is such a new issue, we do not know whether or not the coronavirus outbreak would be sufficient for a “barder event”. There is a duty of the court to protect the public interest as well as prevent the ongoing pandemic opening floodgates to these sorts of cases generally.
Knee jerk applications to court should not be made, there needs to be proper consideration of risks and benefits of making an application.
These applications are tricky and the court would have to be satisfied that:
- The subsequent event (impact of coronavirus) must be seen to invalidate the basis upon which the original order was made;
- The event must have occurred within a relatively short period of time of the original order and the application must be made promptly.
- It would need to be shown that the value of your business had reduced so dramatically (which would need to be evidenced from the outset) that the original order should be overridden.
If an order is set aside, it means that the original order is off the table and all of the factors would come back into play for the court to basically re-determine the case. There would need to be a balanced and reasoned decision made (with legal advice sought) as to the risks and benefits of making an application to court.
If you are concerned about being able to comply with a financial order and need advice as to your options, feel free to contact any of the team at Maguire Family Law and we can guide you through this challenging time.