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Is Covid-19 a Barder Event?

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Family Team Director Jennifer Allen considers whether Covid-19 is a Barder event in our latest blog post.

When separating couples reach agreement as to how to deal with their finances in divorce or dissolution proceedings, the best way for this to be recorded is for it to be set out in a consent order that is approved by the court. If there are ongoing court proceedings to resolve financial claims, the court will make a final financial order within those proceedings. The order made by the court is final and binding upon Decree Absolute and there are limited circumstances where final financial orders can be “reopened”. 
 
Can the court “reopen” a final order?
 
It is important for separating couples to feel secure that once a final financial order has been made it is indeed final, in order to provide them with security and certainty for the future. This finality of litigation is a priority for the court and therefore any attempt by one party to look behind a final order at a later date, must be subject to a raft of strict checks and balances, a test which which is difficult to satisfy.
 
The court has the discretionary power to consider whether final orders can be set aside in extremely limited circumstances or where there are found to be proven allegations of a significant mistake or material non-disclosure by one party which would make the final order made no longer fair or just.
 
Previously the leading case of Barder v Barder (Caluori Intervening) [1987] 2 FLR 480 provided guidance. The House of Lords decided that the court can exercise its discretion to grant leave of appeal out of time from an order made after a divorce, on the ground of ‘new events’ provided that certain specified conditions are met. Such ‘new events’ are known as Barder events however the court retains discretion and simply satisfying the Barder requirements does not automatically entitle the applicant to an order setting aside the original order.
 
Please be mindful that the power of the court is discretionary and the court can refuse to set aside an order even if the principles in Barder and later cases are not satisfied. 
 
In the case of Cornick (No.1) [1994] 2 FLR 530, the Court considered such an application in light of a significant increase in the value of an asset and decided that it was not possible, except in very limited circumstances, to reopen a final order.  The case also provided guidance as to three possible ways to categorise a change in the value of assets and relevant implications:
 
• Where an asset was taken into account and correctly valued at the date of the hearing and subsequently changes value in a relatively short time (as a result of natural processes of price fluctuation), this would not result in an order being reviewed.
• Where a wrong value was given to an asset at the hearing, and it had been known to be incorrect at the time, if this would have led to a different order it is open to the court to reopen the order, provided it is not the fault of the person alleging the mistake. These are claims of mistake rather than Barder events and have been described as “known unknowns”.
• Something unforeseen and unforeseeable has happened since the date of the hearing/order which has altered the value of assets so dramatically that makes a substantial change to the balance of assets brought about by the order. These events have been described as an “unknown unknown”. 
 
Would a change to the value of assets as a result of Covid-19 be considered a Barder event and allow the reopening of a final order?
 
Interestingly, the financial crash of 2008 was not considered to be a Barder event in the case of Myerson (No.2) [2009] 2 FLR 147, as the Court determined ‘the natural processes of price fluctuation, whether or houses, shares or any other property, however dramatic, do not satisfy the Barder test’. 
 
It may be that there are some cases where circumstances have been so radically changed by Covid-19 that one or both parties may need to approach the court to reconsider an order, however this would generally be the exception rather than the rule. There would be a limited timeframe in which orders are likely to be considered appropriate for being reopened, namely in the months prior to the government imposing ‘lockdown’ in March 2020, as agreements reached after lockdown would have limited success in running arguments that the impact of the virus at that stage was unforeseen and unforeseeable.
 
Whether an event resulting from Covid-19 will be considered a Barder event will be fact specific, but could include the unexpected death of a party, a business having cease operation due to lockdown, or levels of income being negatively impacted.  
 
There is no test case for this as yet however it is anticipated that the courts will continue to allow successful applications to set aside final orders in only the most exceptional of cases, juggling the two competing priorities of achieving a fair outcome and the finality of litigation. The court is expected to continue to try to use alternative means to achieve fairness between the parties where possible, including varying maintenance payments and/or lump sum instalments payments. 
 
If you would like to discuss the impact of Covid-19 on your financial settlement, please feel free to contact a member of our Family Law Department on 01242 574244 and we will be happy to meet you and discuss your situation.
 

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