THE economic downturn may force some divorced and separated spouses back to the courts to ask for reductions to agreed settlements and maintenance payments.

According to Geoffrey Shannon, a family law solicitor, judges have shown themselves to be willing to alter separation agreements by increasing awards to spouses when their former partner’s finances substantially improve.

Shannon said that following the credit crunch and deterioration in the economy, spouses are using this precedent to ask for their financial obligations to be reduced due to their decreased finances and devalued property portfolios.

“In the current financial climate, the courts will be more willing to intervene on separation agreements,” the solicitor said. “Where it can be shown that there is a substantial change in finances which were impossible to anticipate, then judges can decide there is a case for a readjustment as long as there is still a proper provision for the weaker party.”

Although no cases have come to court, Shannon said some have been settled outside courtrooms, based upon one of the party’s reduced financial means.

Hilary Coveney, head of family law at Matheson Ormsby Prentice, said applications had been made for agreements reached at the height of the property boom to be reviewed. “A number of cases have been settled where assets had been worth considerably more than they are now. That drop has typically been caused by property prices or stocks and shares dropping in value,” she said.

“We are now seeing cases where one spouse is seeking to have the case reopened to have the figure adjusted to reflect today’s values.”

The circuit court handles 97% of divorce cases, while those involving more than ¤5m in assets are heard by the High Court. Recent judgments have established that courts do have the power to adjust agreements between the time of a separation and a divorce.

A case from last year even raised the spectre of a “third bite of the cherry” where a spouse’s financial standing changes significantly after divorce. In a case known as JC v MC, Judge Henry Abbott ruled that even where a divorce agreement includes a “full and final settlement” clause, the court is entitled to adjust maintenance payments where a person’s finances had materially changed.

“Clean break” divorce is hard to achieve in Ireland and family law solicitors say the recession will probably link separated spouses together for longer.

“If you are the spouse that is paying, then clearly it is available to you to go back and say that you are not earning the same amount or are not expecting the same financial package you had been at the time of separation,” said Karen Hickey-Dwyer, a partner at Ivor Fitzpatrick solicitors.

“Divorce has never seen a recession in Ireland. It came in 1996 as the boom was getting started and wages have gone up, up and away since. We are just beginning to see this rear its ugly head now.

“It was ugly before the boom but now we are seeing this tie people together economically. As they cannot sell their family home they are indefinitely linked economically.

“Clean breaks and full and final settlement are very difficult to put in place, especially during this economic downturn.”

Hickey-Dwyer said she expected couples going through a divorce to wait until an upturn in the economy before attempting to reach a final settlement on the division of assets.

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