Worthingtons Solicitors

Covid-19 fall-out could impact on divorce finances

It is fair to say that few people, until recent times, expected the massive and widespread impact of the spread of the Covid-19 pandemic on just about every aspect of our lives.  And indeed, over the last few months, when life carried on as normal, many separating couples will, of course, have settled their financial affairs either by agreement, or by having secured decisions from the Court determining the division of their assets as part of their divorce proceedings.

It is normal, in these types of cases, for the value of assets to be offset and balanced against each another.  One such example would be whereby a husband wishes to retain a business interest or a valuable pension investment, and the wife wishes to preserve ownership of the family home.  Whilst the division of such assets, finalised a matter of months ago, may have been equitable at the time, it could be that in some cases, the impact of recent events may have resulted in significant changes to the value of some of those assets, which could potentially render what was a fair settlement a short time ago, an arguably unfair settlement now.

The question may arise in such a case as to whether a final financial Order can be overturned or changed, if the fairness of the outcome has been undermined by recent and unforeseen events. 

To satisfy any Judge hearing such a case, the court will need to be persuaded that recent events constitute what is known as a ‘Barder’ event. 

A ‘Barder’ event (which takes its name from the tragic case establishing this legal principle) is an intervening event so significant that it changes the circumstances under which the terms of the Order were made.  The change must undermine, or invalidate, the basis of the Order, to the extent that the fundamental assumption by which it was made, would render the case, were it to be appealed, certain or very likely to succeed. The events must have occurred within a relatively short time of the Order having been made, and an application for leave to appeal out of time would need to be made promptly.

There have been a number of attempts by parties in the past, to issue applications under the ‘Barder’ principle, so we do have some guidance as to what circumstances may or may not constitute a ‘Barder’ event. Cases which tested the courts preparedness to open up previously finalised Financial Orders came before the courts, for example, following the financial crash in the mid 2000s.  The courts however largely determined, in such cases, that if an asset had been taken into account and correctly valued at the date of the original hearing, but had changed in value within a relatively short time due to the natural process of price fluctuation, this would not be sufficient to constitute a ‘Barder’ event.

It is yet to be determined whether the economic fallout from the coronavirus situation has brought about something akin to a ‘natural process of price fluctuation’, or circumstances altogether more fundamentally challenging and which the courts may therefore be prepared to consider as a suitable ‘intervening event’. The Courts are yet to determine this issue in any reported case; no doubt time will tell whether or not a dramatic change in the value of an asset, as a result of the health crisis, which does undermine the fairness of an Order previously made, constitutes a ‘Barder’ event. Should you have any queries arising from this article, or in relation to any aspect of family or matrimonial law, please contact one of our specialist family lawyers on 028 9181 1538 or e-mail [email protected] to speak to one of our experienced team in confidence.

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