Covid-19 and its effect on existing Financial Settlement Orders
As the difficult times are ongoing, many of you may ask whether, during these unprecedented circumstances, the financial settlement cases which were approved by the Court can be amended.
As a result of the breakdown of marriages and civil partnerships, a number of financial claims arise. In the absence of a final Court order for these claims, they can take very long to be resolved.
Some parts of Final Orders may be changed. The Court, upon request, can alter the amount due or can also change the period of any payments. This would be an option to be considered if there has been a change in your financial stability as a result of Covid-19.
Can you, however, ask for a variation in “capital” settlements, i.e. fixed lump sum payments, or a division of property, shares, pension, etc.? Usually, these will not be a subject to variation once a divorce or dissolution has come to an end.
One instance where a final court order can possibly be varied is on the occurrence of a “Barder event”. A Barder event is where something happens soon after an order is made which challenges the basis of the order itself. This is named after a very tragic case which was decided in Courts in 1988.
In 1988, the Court set out 4 criteria which had to be met, in order to acquire permission to appeal out of time on the basis of a Barder event. These conditions are as follows:
- That the new event invalidated the basis for the order which was originally made;
- That the new event had taken place within a short period of time after the initial order was made;
- That the application for permission to appeal out of time had been submitted promptly/immediately after the event took place;
- That granting leave to appeal would not prejudice any third parties’ position (for instance, if the house in the proceedings had been sold to a third party who is not connected to any of the party, this would not be set aside).
Considering the above 4 factors, is Covid-19 an event which may be called a Barder event?
Whilst one may think that it possible that the circumstances and effects of Covid-19 may be considered as a Barder event, it should also be considered that as a whole nation we are going through economic uncertainty. It is already observed that share prices and pension valuations continue to fall, accordingly, it is not very clear whether this would amount to a Barder event.
It is worth stating that following Barder decision, some applications were made to the Court, however, it is very rare that the Court finds these arguments successful.
The recent case of Critchell v Critchell is one case which has successfully outlined a Barder argument.
This was a case where the only asset in the proceedings was a matrimonial home worth £190,000 with an outstanding mortgage of £10,000. In addition, the husband had bought a property for himself, with a loan of £85,000 from his father and a mortgage of £63,000. He, therefore, had a debt to his father of £85,000. By agreement, the husband and wife
entered into a court order which stated that the matrimonial home would be transferred to the wife (as she would be taking care of the two children of the family). They further agreed that there would be a charge against the matrimonial home, in favour of the husband, as to 45% of the equity. The husband would be able to redeem this charge on various events such as the youngest child reaching 18, the wife’s death, the wife’s remarriage or wife’s cohabitation of over 6 months with another person or upon the sale of the matrimonial home.
Within a month of the above order being made, the husband’s father died, leaving him a sum of £180,000 upon his death. The husband, therefore, became debt-free to his father and he was able to pay off his mortgage of £63,000. He became an owner of a mortgage-free property and lump sum amount of £117,000 in cash.
Subsequently, the wife appealed against the order and argued that the husband’s father’s death amounted to a “Barder event” which challenged the basis of the initial order. The Court of Appeal accepted the wife’s argument and made an order which terminated the husband’s charge against the matrimonial home in its entirety.
It remains unclear whether the current lockdown and its economic consequences can be valid arguments for a case to be successful under Barder event. The current situation is a sudden change, subsequent to Government intervention and required by a global pandemic. The Courts on previous occasions held that the reason for the economic variation is not a relevant factor to be considered in line with Barder. It is yet to be seen whether consequences resulting from Government legislation that merely could not have been foreseen a year ago would be adequate to explain a variation to present Orders.
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Connaught Law and authors accept no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Connaught Law. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Connaught Law.