PEOPLE HAVE begun turning up at the family law courts with "horror stories" as a result of the economic downturn, a conference was told at the weekend.
Senior counsel Gerry Durcan said a recent case in the High Court involved the possible division of over €2 million debt.
In the past year the landscape had dramatically changed as a result of the economic downturn, Mr Durcan told the annual Round Hall family law conference in Dublin. "Everyone is worth less. In many cases the courts are faced with dividing a negative," he said, referring to the minus €2 million case, which was settled.
Last July people started turning up in the family law courts with horror stories, he said. As yet there were few written judgments based on the new financial circumstances.
"We may have to face up to the fact that while people might be able to settle their personal lives, they may not be able to settle their business and professional lives," he said.
Historically there had been three ways of ensuring "proper provision" for both spouses following separation or divorce: borrowing from a bank; the sale of property and division of the proceeds; and the transfer of property from one party to the other.
"Where are we now? It is very difficult to get money from the banks for a business. It is virtually impossible to get money to fund a matrimonial settlement. Banks won't lend money to release equity from property," he said.
Considering what the solutions might be, he suggested that the courts might be asked to make contingent orders. "It might be necessary for the court to make orders on the basis of certain things happening, like getting finance. If the conditions are not met, then you could go back to court. It may be appropriate for the courts and the judiciary to look at a structure of court orders facing up to new realities."
The continuance of a business relationship between spouses in a family business may also be a reality that could not be avoided, he said. "If they can't sell and can't borrow, the lawyers in the case will have to put arrangements in place that will protect their clients, like shareholders' agreements or a formal partnership between people," he said.
Since a case called T and T, case law had built up suggesting a percentage of the family assets of between a third and a half in a long marriage was the appropriate amount for the dependent spouse. Other considerations were now relevant. "Should a premium be paid for getting more certain unencumbered assets?" he asked.
Referring to a case in which the judge had said that the wife was in a better position in terms of her salary, but the husband's financial position was more secure, he asked: "What is the effect of security? Is there a premium on being secure?" He said there were numerous cases building up in the courts where people were seeking to have varied orders that had been made, and where their financial circumstances had changed.
These were difficult time for lawyers and their clients. They and the courts would have to adapt, he said.