How might COVID-19 affect Financial Orders in Divorce?

The speed at which the COVID-19 pandemic has spread took us all by surprise. In the weeks before the full impact could have been predicted, many people will have secured final financial orders as part of divorce proceedings.

It is often the case in marital settlements that rather than being split equally, assets are offset and balanced against each another. For example, it may be common for a husband to wish to preserve his business and pension, whilst the wife wants to secure a home for the children. While the settlements may be fair when made, recent events may have created significant changes to the value of some assets.

How do Barder events affect Financial Orders?

So can a final financial order be set aside or varied?

To satisfy the criteria, the Judge would have to be persuaded that the case satisfied a “Barder” event. This is where there has been an intervening event that changes the circumstances and may undermine or invalidate the basis on which the original financial order was made.

This new situation must invalidate the basis, or fundamental assumption, by which the order was made, so much so, that if permission was given for an appeal, that appeal would be certain or very likely to succeed. These events must also have occurred within a relatively short time of the order being made, and the application for leave to appeal out of time would need to be made swiftly.

Numerous attempts have been made in the past to invoke the Barder principle, so we have some guidance as to what will and will not constitute a Barder event. Particular similarities to the current circumstances are contained in the cases of Cornick and of Myerson. These clarified that if an asset was taken into account and correctly valued at the date of the hearing, but 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.

Does the Coronavirus Pandemic Constitute a Barder Event?

It has yet to be determined whether the Coronavirus situation has brought about a “natural process” of price fluctuation. An appeal may be allowed where something unforeseeable has happened since the hearing if it has altered the value of the assets so dramatically as to bring about a substantial change in the balance of those assets detailed in the order. Although this may appear to apply to a number of orders, the Court has been restrictive in what constitutes dramatic fluctuation. It is generally viewed that where one party willingly adopts a speculative position in agreeing to take on the more volatile of the assets, the Court cannot be expected to re-write the settlement should those assets go significantly down as opposed to significantly up.

The truth is that we have not seen anything quite as comprehensively destructive as the COVID-19 impact in terms of investments, property and income. While guided by previous principles, the Courts have yet to write case law specific to the exceptional circumstances of the Coronavirus pandemic.

To seek advice in relation to divorce, finances or children, please contact Family Law Partner, Anita Scorah on 01625 442123 or email [email protected].