Should you put a ‘COVID clause’ in your divorce proceedings? Lawyers weigh in

TORONTO — As the COVID-19 pandemic stretches time and resources, already high-stress proceedings such as divorces are now in unfamiliar territory, which some lawyers say is good reason to add “COVID clauses.”

Alyssa Bach, an associate lawyer at Toronto firm Shulman and Partners, explained to CTVNews.ca in a telephone interview Thursday that a “COVID clause” addresses “unknown aspects” of a divorce.

“A COVID clause would be those extra clauses that are added to provide settlement, while still addressing the unknown aspects that come with separating during a pandemic,” she said. “One example would be …if a job loss occurs as a result of COVID, or if somebody is working on a reduced income during COVID.”

Another example would be the agreement of both divorcing parties to “put a pin in it” and not settle their assets or finalize their divorce right away because of the economic uncertainty, mutually agreeing to readdress the proceedings at a later date, Bach said.

“The main goal is that the clauses are there to help people get a resolution while still having that added clarity and protection despite all these unknowns that we’re dealing with,” she said.

Bach says that a “COVID clause” differs from default agreements or clauses regularly used in divorce proceedings.

“What would be required by default is a ‘material change in circumstances,’ and a lot of the times that material change wouldn’t have been known or foreseen at the time they entered it…but when we’re dealing with something like COVID, it could be that your job loss is very foreseeable, or there is a high potential of it happening. So instead of having a dispute over it later…we’re addressing it now to make sure [clients] have that clarity,” Bach said.

CTVNews.ca reached out to lawyers across Canada to ask their opinion on adding “COVID clauses” to divorce proceedings and received a mixed reception to the idea of additional pandemic-specific clauses.

While Canadian divorce laws are governed by the Federal Divorce Act, each province and territory has its own individual family laws that affect divorce proceedings.

Senior family lawyer Daniel Tapp of the Daniel Tapp Law Firm in Regina, Sask., told CTVNews.ca in an email Thursday that it was not his “recommendation or his practice” to add COVID clauses to separation agreements.

“If there is a material change of circumstances down the road a party may apply to the Court for an order or amend the separation agreement,” he added.

W. Timothy Stodalka of Maclean Keith Barristers and Solicitors, who also practices law out of Regina, said he had contacted “a number” of other lawyers who practice family law in Saskatchewan about COVID clauses.

“Consistent with my own experience – none of them have observed a general trend where by the resolution of property division, custody, child or spousal support issues is being put on hold because of COVID-19,” he said in an email to CTVNews.ca Friday.

Stodalka said it is only when one of the divorcing parties has been “significantly impacted by the pandemic” that lawyers have been recommending that settlement negotiations be put on hold – but without mention of specific COVID clauses.

Patrick Leamy of Leamy Family law in Calgary, Alta., said in an email to CTVNews.ca he has “never, since the pandemic started, ever been presented with a clause in a contract that would intentionally delay a resolution of one or more issues arising in a separation.”

Leamy said the best approach for families going through a separation is to “resolve matters as quickly, openly and fairly as possible” so they can move on, and that a clause “suggesting or requiring intentional delay is contrary to that.”

“I would not think such a clause is a good idea,” Leamy said, adding that he recognizes the pandemic has created uncertainties like job and income loss, but that the regular contingency plans used in divorce proceedings take care of those issues as they arise.

“I don’t agree [pandemic] uncertainties should be treated any differently,” he said.

Jane Reid of Jenkins Marzban and Logan LLP in Vancouver, B.C., said she has not seen a trend of clients asking for COVID clauses in the province, but some assessment experts are making use of them.

“When COVID initially hit, parties to matrimonial matters did seem to freeze for a period of time, not knowing what to expect and what to do when it came to pursuing and finalizing settlements – we as counsel were also being cautious because of the economic uncertainty,” she said in an email to CTVNews.ca Thursday.

Reid said that COVID-19 presented a particular challenge “where settlement was contingent on receiving expert opinion on market values of businesses and real estate,” and so experts in those fields often included a “COVID clause” to ensure parties in the divorce proceedings were aware their opinions were based on the current market conditions – and not “a prediction of future values,” she said. “Such predictions are not usually included in these reports, experts are being cautious.”

While Reid did acknowledge in her email that “some parties continue to be apprehensive about accepting current market values and moving forward with settlement,” and in rare instances counsel may suggest “now is not the time to settle” – a “vast majority” of clients remain prepared to proceed with a divorce despite the pandemic.

DIVORCING COUPLES HAVE A DECISION TO MAKE

Senior lawyer and owner of Clayton Law based in Ottawa, Ont., Darrin Clayton, told CTVNews.ca in an email Friday that parties in divorce proceedings have a decision to make – take a “COVID-cautious approach” or “accept that this is a once in a lifetime event…and basically ‘ignore’ COVID in their agreements.”

Senior Parter Anne-France Goldwater of Goldwater Dube Family Law in Montreal said in an email to CTVNews.ca Friday that the “only reason” to have a COVID clause, from her firm’s perspective, is to cover how access exchanges will be handled during a lockdown, such as the pick up or drop off of children – especially if it occurs after Quebec’s curfew.

“Other than that, there is very little economic uncertainty here: people who have lost their jobs are jobless, hence we calculate support based on their employment insurance benefits,” she explained.

Clayton said COVID-19 has impacted divorces and family law in five different areas: volume of requests, parenting and custody access, asset division, real estate property and income.

Clayton said in his more than 25 years in practice, he has “never seen the volume” of family law cases that he is seeing now.

“We are having difficulty keeping up,” he said, adding he has an “unlimited pool of clients to service.”

Clayton said he has seen other lawyers write “pages and pages” of COVID clauses and protocols into parenting or custody and access agreements – but the problem is “those protocols can change next week.”

“The concern is that these clauses will become outdated quickly – are the parties then going to live with an outdated agreement and have to return to some potentially difficult and expensive process to amend those clauses?” he said.

Clayton also pointed out that in his practice, he tends not to include “a lot of directions” in custody agreements as his clients “do not need us to tell them how to parent,” and suggested that if the divorcing parties do want COVID clauses added in a parenting agreement, he would refer them to a parenting mediation specialist.

PANDEMIC FALLOUT IN FAMILY LAW EXPECTED ‘FOR YEARS TO COME’

Ottawa registered psychotherapist and parenting mediator-arbitrator Melissa Lafreniere told CTVNews.ca in an email Friday that she agreed with Clayton’s assessment, saying that parties “have to be mindful” of how they uses clauses related to COVID-19 when it comes to parenting time, as the pandemic has created a significant amount of stress on what can already be strained relationships.

When it comes to asset division, Clayton pointed out that Ontario law says that the parties “share in the growth of the assets that accumulated in the marriage,” and that in his experience, COVID-19 has not had a huge impact in his area.

“Early on, we saw huge drops in RRSPs and investments,” he said. “However, we then saw that they basically bounced back, so there was a lot of nervousness in the early days but this anxiety has largely dissipated.”

Clayton acknowledged that if the divorcing parties have a business whose value has significantly decreased post-separation, it may be advised to “wait and see” if the value of the business bounces back.

“But the law is pretty strict about using the date of separation value and not taking into account post-separation events. I anticipate that in high net-worth cases there will be a lot of litigation over this issue in the years to come,” he said.

Clayton also flagged real estate as a potential contender for a necessary COVID clause, like Reid in B.C., as he has seen “astronomical increases in the value” of property in Ottawa.

“So, parties separate. One party stays in the matrimonial home. Where is the other party going to buy a house? Inventory is down, bidding wars etc. It makes it very difficult for parties to move on. There are couples who are living ‘separate and apart under the same roof’ with nowhere to go,” he explained.

But where the impact of COVID-19 has been most significant is income, Clayton said.

Things like child support payment, “section seven expenses” which include things like braces, tutoring and daycare, along with alimony are directly affected when a parents has a change in income.

Clayton said his firm has been taking a “COVID-cautious approach” and using interim solutions that will be re-evaluated “when COVID is ‘over,’” he said.

But with variants spreading and vaccine supply chains delayed or disrupted, Clayton said he believes that with “court systems overwhelmed at the best of times…there will be fallout from COVID in family law for years to come.” 

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