Husband can't use pandemic to set aside divorce settlement

A husband has failed in his attempt to use the impact of the Covid pandemic as a reason to have his divorce settlement set aside.

The husband and his wife had reached a settlement on 12 March 2020, shortly before the UK 's first national lockdown.

He was managing director of the family company, which was involved in the wholesale distribution of commercial printers and software manufactured in China. He held 51% of the shares and his wife held 49%.

The husband wished to retain the company, which was valued at over £3 million and represented the bulk of the family's assets. Under the terms of the consent order, he agreed to pay the wife £1 million in three lump sum payments and the wife agreed to transfer her shares back to the company.

The first payment was due in June 2020. He failed to make the first payment and applied to set aside the order on the basis that the Covid pandemic, which he said had been unforeseeable when the settlement was made, had dramatically reduced the value of his assets.

The Family Court ruled against him. It held that it was possible for a new and unforeseeable event to be considered when deciding whether to set aside an order.

However, at the date of the consent order, the risk to the company had been reasonably foreseeable because:

  • The husband was on notice of significant and developing world events, which might have a financial impact on the population of the UK.
  • The virus had spread to Europe. Businesses in the UK were preparing for disruption; emergency economic measures were being taken and the stock market was falling dramatically. The issue of foreseeability had to be viewed against that backdrop.
  • The husband was an experienced businessman. The potential connection between a diminution in commercial activity flowing from a potential lockdown and an impact on company sales was clear.

The husband had agreed to the order notwithstanding that context. He had not foreseen it, but the event was foreseeable.

Please contact us if you would like more information about the issues raised in this article or any aspect of family law.

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