The recession is well and truly upon us and its effect is being felt in every aspect of life in Ireland. Its impact is also being felt in a very significant way in the family law courts where the dramatic downturn in the economy and in asset values has resulted in an increasing number of people turning to the courts for assistance when they cannot meet their financial obligations arising from a separation or divorce. This has created a new set of problems for the courts to deal with because since the introduction of the judicial separation legislation in 1989 and divorce in 1997 the Courts are for the first time having to grapple with family law in the context of a severe recession.
So under what circumstances do the courts have the jurisdiction to deal with such situations? If the parties have resolved matters in the context of a separation, whether by Deed of Separation or by judicial separation, then there is a forum available to them to revisit matters and that is to do so at divorce. In other words, it is open to the parties to issue divorce proceedings after they have been living apart for four years and in the context of those proceedings the parties can ask the court to revisit any previous agreement or court order.
However, what options are available if a divorce has already been granted to the parties? Unlike a separation, a divorce cannot be simply agreed between the parties and can only be granted by a court. A court will grant a divorce either in terms of the settlement agreed between the parties or, if no agreement can be reached, by imposing orders on the parties after a full hearing of the case. The question then arises as to whether the courts are entitled to review a divorce order at a later date if the financial circumstances of one of the parties deteriorates.
The answer is that section 22 of the Family Law (Divorce) Act 1996 entitles the court to vary certain types of orders granted at divorce but not all types of orders. Orders relating to maintenance, lump sums payable by instalments (where certain instalments remain unpaid) and certain types of property adjustment orders can be varied by the court if the court “considers it proper to do so having regard to any change in circumstances of the case and to any new evidence”.
However there are other kinds of orders that cannot be varied under section 22. For example, a simple lump sum order (ie a once off lump sum payment rather than a payment by instalments) cannot be varied. Further, the wording of section 22 does not give a court the jurisdiction to vary a simple property adjustment order, for example the transfer by one spouse of his or her interest in a property to the other spouse.
So is there anything that a party to a divorce can do to vary an order granted at divorce which does not fall within the ambit of section 22? In the recent case of O’C v O’C the High Court had to deal with such a situation. In this case the financial circumstances of the husband had deteriorated significantly since the conclusion of the case to the extent that he was now unable to comply with his obligations under the order, in particular the transfer of certain properties to the wife. The husband sought to reopen the whole case and sought from the court new orders to reflect the current financial circumstances of the parties. Ms Justice Dunne refused to do so. However, Ms Justice Dunne did make a further property adjustment order on the family home and instead of the family home being transferred to the husband (as per the original order) a new order was made under which it was transferred to the wife.
In refusing to reopen the case Ms Justice Dunne upheld the general rule that the courts would not revisit court orders, especially orders formalising terms of settlement negotiated between the parties where such terms of settlement were freely entered into at arms length by parties who had received proper legal advice. However, Dunne J said that applications to vary or to set aside terms of settlement would be entertained in certain circumstances. In this regard she stated that in order for an application to vary to be successful new unforeseen events must have occurred since the making of the order that invalidated the basis on which the order had been made so that an appeal would be certain or very likely to proceed if an appeal had been made at the time the order was granted. Further, the Judge stated that the new events should have occurred within a relatively short time after the making of the order.
The upshot of the above is that the court set a relatively high threshold on a person seeking to vary an order granted at divorce which does not come within the ambit if section 22. In this case Dunne J noted that the husband’s difficulties were not so much a new event as the continuation of an existing trend and the husband failed in his application to set aside the settlement. The case seems to suggest that where financial difficulties were not wholly unforeseeable at the time of a settlement, particularly a recent one, it will be difficult to succeed with an application based on those financial difficulties.
This begs the obvious question of where this leaves the spouse who was to receive, for example, a lump sum which cannot now be paid. In other words what happens if, for example, a husband cannot comply with an order to pay a lump sum to his former wife but yet does not meet the criteria set out above to allow him to request the court to vary the order? Such a situation leaves the wife in a very unsatisfactory position. Her husband may genuinely not have the money to pay the lump sum but there may not be any point in bringing him back to court to have the order enforced. The order will remain in place in any event and it may be that in such circumstances the wife may have to bide her time until the husband’s financial position recovers, if at all.