Could the Covid-19 lockdown be a Barder type event?

Events which lead to the successful re-opening of cases are known as “Barder” events, after the sad case of Barder v Barder (Caluori Intervening) [1987] 2 FLR 480, where a financial award to meet the needs of the wife and children was fundamentally undermined by the death of the wife and children weeks after the order had been made.

“A court may properly exercise its discretion to grant leave to appeal out of time from an order for financial provision or property transfer made after a divorce on the ground of new events, provided that certain conditions are satisfied. The first condition is that new events have occurred since the making of the order which invalidate the basis, or fundamental assumption, upon which the order was made, so that, if leave to appeal out of time were to be given, the appeal would be certain, or very likely, to succeed. The second condition is that the new events should have occurred within a relatively short time of the order having been made. While the length of time cannot be laid down precisely, I should regard it as extremely unlikely that it could be as much as a year, and that in most cases it will be no more than a few months. The third condition is that the application for leave to appeal out of time should be made reasonably promptly in the circumstances of the case …fourth condition is that the grant of leave to appeal out of time should not prejudice third parties who have acquired, in good faith and for valuable consideration, interests in property which is the subject matter of the relevant order.” Per Lord Brandon

In order for an application to set aside any final remedy order to succeed under Barder v Caluori, four conditions must be met:

1. There must have been a new event which has fundamentally undermined or invalidated the basis of the original order; and
2. That event must have occurred within a relatively short time after the order was made. There is not a fixed period, but in most cases it will be no more than a few months; and
3. The application to set aside must be made promptly; and
4. A third party who has, in good faith and for good consideration (payment), acquired an interest in relevant property must not be prejudiced.

Courts have generally taken a very restrictive approach to interpreting and applying the Barder principles, as the following cases show.

Significant changes in the value of assets

A significant change in the value of assets will not ordinarily constitute a Barder event. Mrs Justice Hale, stated in Cornick v Cornick [1994] 2 FLR 530 that:
“The case-law, taken as a whole, does not suggest that the natural processes of price fluctuation, whether in houses, shares or any other property, and however dramatic, fall within this principle.”

In Myerson v Myerson [2009] EWCA Civ 282, a case decided in the aftermath of the 2008 financial crisis, the husband’s shares had fallen significantly in value but the Court of Appeal dismissed his appeal to set aside. The Court did not, however, go as far as to rule that a significant increase or decrease in the value of a key asset would never be sufficient.

In Horne v Horne [2009] EWCA Civ 487, a court order was made that provided for the husband to retain the family business on the basis that the wife should transfer her interest in the company to him, and the wife was to take the final matrimonial home, supplemented by a lump sum. The implementation of the order led to difficulties. The husband had been trading unprofitably in 2004, 2005 and 2006, accumulating what the Judge described as huge losses, followed by a general economic decline, resulting in the husband being unable to meet the lump sum instalments he was obliged to pay due to the decline in the value of his business. The husband’s appeal was initially allowed by a circuit judge. However, it was later dismissed by the Court of Appeal. Thorpe LJ stated: ‘Looking at the authorities as a whole, given that Hale J’s judgment in Cornick has been consistently approved in later decisions, I can only conclude that the true path to be followed by trial judges is the path set by Barder followed by Cornick.’

Was The Event Foreseeable?

One of the factors that have to be considered is whether the event in question was foreseeable. Few would argue that the Covid crisis and the lockdown that followed were foreseeable, (although a pandemic flu virus was apparently used in public planning in Operation Cygnus in 2016, but still unpublished).

Covid-19 occurred in December 2019. However, it was not declared a global pandemic until about 8th March 2020. There could be arguments as to whether, and if so when, it became foreseeable? When the virus was first reported at the end of 2019? Or when Wuhan was placed in lockdown? Or when cases surged in Italy? Or when the UK first announced lockdown measures here on 23rd March 2020, including a prohibition on all property sales?

If Covid-19 itself and the lockdown that followed were unforeseeable, what about the effects of it (i.e. price fluctuations)? Would they be viewed by the courts as foreseeable? Establishing whether or not an event is a Barder event is highly fact-specific. Financial loss suffered as a result of the Covid-19 lockdown and the prohibition on property sales will not necessarily reopen a final financial order, since it applies to all property transactions.

Unemployment suffered by one of the parties:

In Maskell v Maskell [2001] EWCA Civ 858, unemployment was found not been capable of being a Barder event as loss of employment is “something that hundreds of thousands of breadwinners…have to face”.

The death of one of the parties

In WA v The Executors of the Estate of HA (deceased) [2015] EWHC 2233 Fam, the husband 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.

A sudden inheritance

In Critchell v Critchell [2016] EWCA Civ 436 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.

Conclusion

The courts will have sympathy for parties who have gone through a relationship breakdown with the associated financial implications, only to be faced by huge economic pressures which they could not have anticipated. However, there are public policy considerations that will not be easily overcome. The courts have long upheld the principle that it is highly desirable to have finality in civil litigation. It therefore seems unlikely that significant numbers of financial remedy orders will be set aside.

Examples of cases where Barder applications have been made illustrate that the majority are refused. The Court of Appeal has emphasised that successful applications are extremely rare even where the four Barder conditions are met, because the Court can still exercise its discretion and decline to set aside the order.

Covid-19 and its consequences might constitute a Barder event for Orders made in the last few months before the economic impact of Covid-19 was known, although each individual case will be assessed on its own merits as will the level of demonstrable loss.

However, compelling the argument, it is important to remember that the Courts are very conscious of preventing a floodgate of applications, which would undoubtedly influence any such decision. More practically, it is doubtful that anyone would risk funding an out of time appeal to set aside (for which permission will need to be sought) when the prospects of succeeding could go either way.