Love may not survive, but the financial obligations of marriage carry on, even when COVID-19 changes the valuation of marital assets. Business valuers who do family law work know that a divorce legally ends a marriage, but it does not end financial commitments to each other even after the decree absolute has been granted. There is no time limit for making a claim.
Still, the UK courts attempt to minimise set-aside agreements under which financial settlements are rewritten. A new case, HHJ Kloss in HW v AW 2021 EWFC B 20, directly addressed an application to set aside a marital consent order because of the impact of the pandemic on the value of the husband’s business. The husband owed a series of lump sums totalling £1 million based on a financial dispute order that was entered 13 March 2020. The UK entered lockdown 10 days later.
Fast forward to 2021, and now a stay application, an enforcement application, and then a set-aside application were filed. The husband’s business distributed commercial photocopiers, an industry sector that everyone would agree was dramatically hurt by the pandemic.
The judge accepted this principle, stating: “[T]he COVID-19 pandemic is an extraordinary event, different in nature and scale, to any similar world event in the lifetime of the parties…. It is akin to a war, with tentacles spreading across the world.” Therefore, again in principle, the pandemic could allow a successful set-aside claim (a “Barder” event).
But … not in this case: The judge ruled against the husband on the premise that the risk to his company was reasonably foreseeable and that the husband had assumed the risk by keeping the company, which would lead to the greatest potential of personal reward.
An additional note on valuing marital assets in 2021: BVWire—UK is hearing more reports of contention because one spouse accumulated, but did not disclose, crypto assets during COVID-19, while court proceedings were delayed. A typical conversation one lawyer reported involves an anxious spouse who says, “Over the last year or so, I have overheard my husband telling friends about the success of his bitcoin investments. We are now getting divorced and I have no idea how much his cryptocurrency holdings are worth or how to even find that out.”
Despite the powers of the family courts in England and Wales, they can rarely overcome anonymous and undeclared crypto. Business valuers know, of course, that the key is to audit funds flowing into—or out of—traditional “fiat” accounts. This will often lead to either a currency address, or a digital wallet, since the blockchain records all transactions.
If the analyst cannot discover links in this manner, there’s still hope. Courts are accepting documentary evidence (witnessed conversations, emails, etc.) that allow them draw inferences regarding such assets. And, of course, as with the new COVID-19 case discussed here, nondisclosure is always a strong reason (and an excuse for court-defined penalties) to demand a set-aside of previous marital settlements at any time in the future, if new evidence emerges.
Indeed, love may not survive, but honesty is still the best policy.