Unprecedented times – but unprecedented enough to launch a Barder application?

Unprecedented times – two words that are heard repeatedly in our attempts to sum up the coronavirus crisis through which we are living.  No one can see or tell what the cost will be to the world in terms of loss and suffering and short and long term economic and financial impact.
 

For those going through the divorce process and particularly those who have recently agreed financial terms, or had an order made at the culmination of intense and expensive litigation, the financial landscape has already deteriorated dramatically. For some, the deterioration is already beyond recognition in terms of the fall in the value of shares in privately owned companies, pension funds, investments, stocks, ISAs and real estate and in respect of a complete or partial cessation of income as a result of job loss, or the retention of profits and payments which had already been factored into spousal and/or child maintenance calculations.

In the first of our blogs in this series about Barder events and variation, “Am I stuck with my divorce settlement after coronavirus ?”, Cady Pearce and I explained about the case of Barder and how, if you believe you may have suffered a “Barder” event, you might be able to ask the Court to re-open your case.  We also explained that successful Barder cases are rare and that the more appropriate course of action might be to ask the Court to vary your order, on the basis of a significant change in your circumstances.

In this blog, we set out some examples of cases where the English courts have both allowed and refused Barder applications, although it is right to say that the overall number of successful Barder applications can be counted on one hand only and are extremely rare.

• Myerson, 2009 – in this case, the parties reached agreement whereby the wife would receive £11m or 43% of the total assets and the husband £14.5m or 57%. The husband was to pay £9.5m in cash in 5 instalments. He paid £7m but the share price in his company collapsed as a consequence of the 2007 financial crisis so that his share in the former matrimonial assets fell to 14% whilst the wife retained 86% of the value. His Barder application failed on the basis that the natural process of price fluctuations did not satisfy the Barder test.
   
• WA, 2015 – the husband in this case died 22 days after an order was made, which provided for him to receive £17.34m on divorce.  The first payment had been made but the wife then made a successful Barder application to the extent that the lump sum was reduced to £5m, which the estate retained.
   
• Critchell, 2016 - the agreed Order provided for the wife to receive the transfer of the former family home, with a value of £175,000 in return for a charge in favour of her former husband for 45% of the value.  The husband’s father died within one month and he received an inheritance.  On the wife’s application under Barder, the judge extinguished the charge and the husband’s subsequent appeal was unsuccessful.
   
• J v B, 2016 - the value of a Portuguese property, which the wife received as part of her settlement, fell from €660,000 to €225,000 because of an unforeseen planning decision.  The Court said it was not sufficient to amount to a successful Barder challenge and her application was dismissed.

There are many other examples of cases where Barder applications have been made and in the overwhelming majority, refused. The Court of Appeal has emphasised that successful applications are “exceedingly rare”.  Even where the four Barder conditions are met (which we set out in our earlier blog), the Court can still exercise its discretion and decline to set aside the order. 

Whilst the Barder floodgates have held firm since 1988, with only the occasional drip, it remains to be seen whether the impact and effects of the COVID-19 pandemic will cause a tide of Barder applications. If fairness is to continue as the lodestar by which financial applications are determined and orders are made, then it must also prevail amongst the factors that the Court will have to take into account when asked to set aside orders in these truly unprecedented times unknown to most of us in living memory.

Please note that the general guidance provided within this blog is accurate at the time of writing (23 April 2020). It does not constitute legal advice and specialist advice should be sought in individual circumstances.

Further information

You may be interested in reading our other blogs about various challenges families and separating couples are experiencing in the face of the current crisis:

• Am I stuck with my divorce settlement after coronavirus?
• Resolving family disputes through mediation, arbitration and private FDRs during the coronavirus crisis
• Navigating relationships through the coronavirus crisis
• Overcoming the challenges of co-parenting for separated and divorced parents during the coronavirus crisis
• COVID-19 and self-isolation: what to do when the danger is at home

If you are affected by any of the issues covered in this blog, please contact a member of our team of family and divorce lawyers or click here to get started online and find out where you stand.

About the author

Jane Keir is a partner in the family and divorce team. She acts for equal numbers of men and women and many of her clients come from across the country and abroad, as well as London.  Much of her work involves an international element and she works with other lawyers, accountants, actuaries, financial advisers, wealth managers and investigators in order to provide a thorough and comprehensive service to her clients. Among other recently reported cases, she acted for the successful wife in RC v JC, a landmark compensation case, and she represented the successful party in protecting the wider family’s wealth in the case of Daga v Bangur.