Case Law Update – Barder events and pension sharing orders (Goodyear v Executors of the Estate of Heather Goodyear (deceased) [2022] EWFC 96)

Divorce & Matrimonial Finance

30 November 2022

In this rather tragic case the court had to consider whether the wife’s death after the making of a Pension Sharing Order was a Barder Event

The Facts

The husband (H) and the wife (W) agreed their financial settlement and a consent order was approved by the court in January 2021. Decree absolute had been granted in July 2021. The parties had agreed to an equal division of their capital, with each party receiving c.£500,000 and W was to receive 51% of H’s defined benefits pension, which was already in payment and which had a cash equivalent of more than £1million.    Prior to the pension share being implemented sadly W died in August 202, having been diagnosed with cancer in June 2021.

H appealed so as to prevent the order being implemented by the provider until after the conclusion of new proceedings.   He did not pursue the appeal but pursued an application to set aside the consent order, particularly the paragraph dealing with the pension share, together with a stay of execution.    The executors of W’s estate (the parties adult children) opposed the application.

It was agreed that the appropriate procedure under FPR 9.9A was for the matter to proceed on the application to set aside. However, the application for permission to appeal was not dismissed in order to act as a bar on the pension sharing order taking effect as set out in reg 9(2) Divorce etc (pensions) Regulations 2000 (SI2000/1123). As such, it was agreed that the application to appeal the consent order would be dismissed once the decision in relation to the set aside application was concluded.

The matter came before HHJ Farquhar with the main question for the court being whether W’s  death was a Barder event.   The judge was satisfied that the circumstances were such that the test in Barder v Barder (Caluori intervening) [1988] AC 20 could be considered.  That test that is well known. Lord Brandon stated:

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. To these three conditions, which can be seen from the authorities as requiring to be satisfied, I would add a fourth, which it does not appear has needed to be considered so far, but which it may be necessary to consider in future cases. That fourth condition in 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.

Only the 1st limb required detailed consideration the Respondents having conceded the other 3 limbs.   In considering whether W’s death invalidated the basis, or fundamental assumption, upon which the order had been made, the judge noted the difference between sharing to ensure the transferee has income in retirement and an entitlement to a share of the pension as one of the available matrimonial assets. It is incumbent upon the court to understand the reasoning behind the pension share in a case such as this.   HHJ Farquhar concluded that he “was satisfied that the thrust behind the pension share was in order to ensure that the parties had sufficient income during their retirement. If it had been known that Mrs Goodyear would not live more than 6 months after the order was entered into then the same pension share would not have been agreed. It is the intention of the parties at the time that the order was approved that is important, rather than any intention that was formulated thereafter. It appears that Mrs Goodyear latterly formed the intention to ensure that she was able to pass on the benefits of her pension to her beneficiaries, but this intention is only evidenced after she had become aware of her terminal diagnosis and not at the time that the original order was agreed. As such, it is not relevant in considering the fundamental basis of the order when it was entered into.’

HHJ Farquhar set aside the order on the basis that W’s death did constitute a Barder event. However, the court recognised the hybrid nature of a pension in that it is another form of shared capital as well as an income stream to meet needs and that as such recognised the desirability of the ‘earned share’ being passed on to her beneficiaries via the estate. However, it wouldn’t be fair simply to substitute the PODE percentages calculated on the basis of simply sharing the capital values as that would not reflect the fact that H would have continuing income needs and W would not. If it had been known at the time that W would only have lived another 6 months after the agreement a significant reduction in the percentage would have been appropriate as that share of the pension required for her income would not have been needed. The PSO was reduced to 25% to W.

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