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9.09.21

Is the Covid-19 pandemic a ground for setting aside a financial remedy consent order?

In the second of two key reported cases on the issue, His Honour Judge Kloss has accepted that in principle, the Covid-19 pandemic is capable of constituting an event which is grounds for setting aside a final order in financial remedy proceedings. In HW v WW [2021] EWFC B20, the key question before the judge was  Is the Covid 19 pandemic and its impact upon the value of a key asset a sufficient ground to set aside a financial remedy consent order?”. The husband in this case argued that the effect of the pandemic on his business (selling printers and photocopiers to offices), resulting in cash-flow issues which would make it harder for him to pay the sum which had been awarded to his wife, should be considered a ‘Barder’ event. However, in the specific facts of this case, it was held that the criteria were not quite met.

What is a ‘Barder’ event?

In brief, a Barder event is a event which substantially changes the factual basis on which the decision was made, to such an extent that the decision is no longer appropriate and should be set aside. It is named after the case of Barder v Barder [1987] 2 FLR 480, in which the Court established the following criteria by which to measure future similar applications. The event must have been both:-

  1. Unforeseen by the parties involved at the time the order was made; and
  2. Unforeseeable, in the objective sense.

In addition, the events have to have occurred within a relatively short period after the order and the application needs to be made reasonably promptly afterwards. The principle cannot therefore be used as merely another method with which to challenge long-standing judgments.

The bar in terms of unforseeability (both objective and subjective) is set high. Barder is arguably one of the most tragic cases ever to have been reported in the family law sector, and involved an order which required the husband to transfer his interest in the former matrimonial home to his wife, in order to provide adequate housing for her and their two children, for whom she was the primary caregiver. Within weeks of the order, the wife killed both children and then took her own life, thus fundamentally undermining the basis on which the order had been made. In Maskell v Maskell [2001] EWCA Civ 858 it was decided that losing one’s employment could not count as a Barder event (as this is an issue all too commonly faced by households across the country) and numerous other cases have indicated that death of a party will not always fulfil the criteria (depending on the basis on which the order had been made).

Covid-19 and Barder

It was only a matter of time before parties unhappy with their lot would seek to apply the Barder criteria to cases decided shortly before the Covid-19 pandemic took its hold. The Barder criteria are heavily fact specific, and we now know that, in theory at least, the court will accept that Barder should apply to some cases where the parties have been impacted by Covid-19. However, the reported cases don’t show that anyone has thus far been successful. In FRB v DCA [2020] EWHC 3696 (Fam), the husband (who owned hotels, amongst other business assets) argued that an order made in late March 2020 ought to be set aside because of the impact on international travel and the economy in general. His application was refused on the basis of a lack of evidence – specifics needed to be given. In HW v WW, the application was refused because the judge felt that at the point the order was made, it was already becoming clear that number of businesses operating on site was going to be impacted, and thereby the value of the husband’s company and his ability to meet with the terms of the order (by which he was to pay a series of lump sums to his wife). The judge accepted that the husband in this case did not actually foresee the impact on his business, but that it was objectively foreseeable:-

In my judgment, therefore, the Husband was on notice of significant and developing world events, which might well have had a practical and financial impact upon the population of the UK. The virus had spread to Europe, causing lockdowns and threats of lockdowns. The business world in the UK was reacting and preparing for disruption.  Emergency economic measures were being taken and the stock market was falling dramatically. These were world events that were being reported upon, hour by hour, by the world’s media and were there for all to see. The issue of foreseeability must be viewed against that backdrop”

In addition, the judge felt that the company was projected to bounce back significantly in good time, and that matters were by no means hopeless.

In conclusion, when the right set of Covid-19 related facts comes before the court, we will see orders being set aside on the basis of Covid-19 induced Barder events.

 

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Articles are intended as an introduction to the topic and do not constitute legal advice.


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