Family Law

Few would have thought back on 1 March 2020 that we would, some 12 months later, be facing the first birthday of the strictest restrictions on personal freedoms in living memory.  As we approach the anniversary of the first lockdown on 23 March 2020, it seems appropriate that we reconsider one of key questions of family lawyers back in Spring 2020, that of whether the pandemic was likely to satisfy the principles set down in the 1987 case of Barder v Barder [1987] 2 FLR 480.  Unprecedented times, there is no doubt, but unprecedented enough to constitute a Barder event?

As we all know, although final financial orders in relation to income (maintenance orders) are inherently variable, a capital order of the Court is generally binding, save for in very narrowly prescribed circumstances which are beyond the scope of this article.

• By way of reminder…the Barder principle stems from the 1987 case which involved a tragic set of circumstances where the wife killed the children of the family and then committed suicide five weeks after the Court Order was made. The Court of Appeal held that the husband should be given permission to appeal the Order out of time, in circumstances where the entire basis on which the Order had been made (specifically, the needs of the wife and the children) had been entirely invalidated by the unimaginable intervening events.

• Under the so called Barder principle, the Court is permitted to exercise its discretion and to set aside or allow a party to appeal out of time a Court Order, provided certain criteria are met.
  
• In the case of Barder, Lord Brandon laid down four principles, which must be satisfied for a Barder application to succeed:
  a)   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. 
  b)   The new events should have occurred within a relatively short time of the order having been made.
  [NB: Subsequent case law has shown that in most cases this would be no more than a few months.]
  c)   The application for leave to appeal out of time should be made reasonably promptly in the circumstances of the case.
  d)   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.
  
• It is a very high threshold to pass. In many cases historically, judges have concluded that what is alleged to be a ‘new event’ was, in fact, foreseeable at the time of the original order
  
• Key relevant cases cited at the outset of the pandemic as being of relevance to the current situation were those of Cornick v Cornick (No.2) [1995] 2 FLR 409 and Myerson v Myerson [2009] 2 FLR 147, CA.  In Cornick No 2 the value of the husband’s shares dramatically increased and the wife’s share of the assets went from 51% at the time of the order to 20% shortly after.  The Court held that, although unforeseeable, this was the result of a natural – albeit extreme – fluctuation in the markets.  Conversely, the case of Myerson arose as a result of the 2008 financial crash, as a result of which the husband’s asset share reduced from 53% to minus 5.2%.  Again, despite the dramatic features of that case, the husband’s appeal was dismissed.
  
• But has the anticipated (and perhaps feared) tidal wave of litigants seeking to reopen financial orders come to pass?  As yet, it seems not.  An analysis of the case law over the last year shows only very few financial remedy cases that have mentioned coronavirus as a relevant factor and, to the author’s knowledge, there has not yet been any reported case of a successful Barder application for set aside as a result of the pandemic.  Of those few cases that have considered such applications, the author is aware of the following:
  
• First, and unusually, the case of LB v DB [2020] EWFC B34, heard before Deputy District Judge Hodson, was reported in August 2020 following a hearing in May 2020.  The case is interesting in that the wife’s application to set aside (lump sum orders against her) and the husband’s cross application to enforce had been made in early December 2019 and before the pandemic was on anyone’s radar.  However, by May 2020, we were in a very different position and, therefore, the DDJ took the opportunity to carry out a thorough analysis of the scope of set aside applications, including some consideration of how this may now play out in the event of such an application being made as a result of the coronavirus.  The judgment is comprehensive and detailed and bears reading in full for legal practitioners involved in the financial remedy field.  The Judge determined that, at that point in the pandemic (by then, mid June) and with the uncertainty in the economy and property market as to the medium and long term effects of the pandemic, he was not convinced that he should be setting aside the original order
  
• Secondly, in the case of CB v EB [2020] EWFC 72 Mr Justice Mostyn considered whether the husband’s application to set aside an agreement (whereby H was to receive properties and W a lump sum) on the basis that the properties had sold for significantly less than anticipated should be allowed to continue to a full merits consideration or whether the grounds pleaded were insufficient to entertain such an application any further. The Court went with the latter and dismissed the Husband’s application.  However, importantly, the husband in this case accepted that the change in circumstances did not constitue a Barder event and instead relied on the principles in Thwaite v Thwaite [1981] 1 FLR 26 that the Order remained executory only (see further below) and on Section 31F(6) of the Matrimonial and family Proceedings Act and Family Procedure Rule 9.9A that he asserted provided the Court with an almost unfettered power to set aside any order of the Family Court where exceptional circumstances justify it.  Mostyn J did not agree and dismissed the husband’s application, on the basis that the Court had no lawful power to grant him the relief that he sought.
  
• Thirdly, in the case of FRB v DCA (No.3) [2020] EWHC 3696 (Fam) the husband applied to vary a lump sum order in relation to both quantum and timing or for it to be set aside on a Barder basis.  This time, the application was said to be made specifically as a result of H’s assets being affected by the economic downturn caused by the pandemic.  The Judge (Cohen J) refused H’s application on the basis that there was no documentation available to evidence that his wealth had significantly reduced and that it was not appropriate to consider the general financial situation of the economy.  Cohen J also stressed that H’s application should be viewed in the longer term, with the stock market indices improving and a return to the pre-pandemic position expected in a matter of years.
  
• Otherwise, there may be a number of reasons why the anticipated deluge of cases has not yet come to pass:
  
  (a)    Litigants who have been ordered to pay lump sums, not expressly drafted to be a series of lump sums, may have instead have sought to rely on the principle highlighted in Westbury v Sampson [2002] 1 FLR 166 and the jurisdiction created by s.31(1) of the Matrimonial Causes Act 1973 allowing the Court to vary a lump sum payable by instalments not only in relation to the instalments themselves but also allowing the Court to vary, suspend or discharge the principal sum.  Whilst widely considered to be a power to be used only sparingly, it remains an option and, for many, likely a lower hurdle to a successful application than fulfilling the stringent Barder tests of Lord Brandon.  Certainly, in relation to the timing of payment (if not quantum), this has been a safety net for many paying party litigants who, temporarily at least, were adversely affected by market conditions immediately following the first lockdown.
  (b)    Others may have instead have relied on the (arguably) more expansive and accommodating terms of the Thwaite jurisdiction (Thwaite v Thwaite [1981] 1 FLR 26), that the terms of the Consent Order remain executory until fully implemented and, as a result of the pandemic and a significant change in circumstances, it is inequitable to hold the paying party to his or her obligations (per Bezeliansky v Bezelianskaya [2017] EWCA Civ 76 and US v SR (No. 4) [2018] EWHC 3207 (Fam)).  The supposedly lower test required by Thwaite of a “significant change in circumstances”, rather than a subsequent event which was unforeseen and unforeseeable and which invalidates the basis upon which the Order was made, has been seen by some as an easier route to having an order overturned. On the flip side, it has been argued that the fact of an order remaining executory does not and should not result in the Court applying a different or lower test to an application to set aside that order as is already provided for by Family Procedure Rules 2010 Rule 9.9A and Barder. In addition, it could be argued that the Thwaite jurisdiction does not operate to set aside substantively the relevant paragraph of the order (i.e. as to quantum of the lump sum payable), but to permit the limited variation of the order only insofar as to ensure its implementation (e.g. as to timing).
  (c)     Alternatively, paying parties may instead be seeking that the time for compliance with orders and obligations (such as the payment of lump sums) are extended pursuant to the liberty to apply provision incorporated into the drafting of most Court Orders and/or the Court’s inherent power (Masefield v Alexander (Lump Sum: Extension of Time) [1995] 1 FLR 100, CA), though this power is limited in that it allows only a modest extension of time (in Masefield itself this was just one month).  However, again, this may for some be seen as having more chance of success than a full blown Barder application.
  (d)    Of course, the Court system struggles to keep pace even in normal times and it may simply be that the caseload pressure has meant that Barder applications made have not yet come before the court for final hearing and determination. 
  (e)    Equally, with the costs and risks involved in a Barder application (and a reminder here that the usual “no order as to costs” rule does not apply to set aside applications) and the delay in getting many cases heard, it may be that more are turning to forms of ADR in order to try and resolve any disputes of this nature.  The commercially minded and pragmatic receiving party may determine that 50% of something now, or 100% of something in two years’ time, is better than 100% of nothing now and be more open to negotiations than they might have been before March 2020.  Only time will tell.
  
• In any event, given the constant emphasis by the judiciary and the authorities on the importance of the finality of final orders, the initial concern of the profession about an anticipated deluge of applicants seeking to reopen financial orders appears to have been unduly pessimistic and, for the time being at least, the feared breaching of the floodgates has not yet come to pass.
  
• The author’s view is that, whilst the pandemic and its ramifications are undoubtedly different to the “natural process of price fluctuations” that were considered in cases such as Myerson, equally, very few litigants who have suffered financial loss as a result of the pandemic will be able to reopen a financial order. The Barder hurdle is a high one and, as we all know, the Courts are very slow to re-open financial orders. The opening remarks of DDJ Hodson in LB v DB were “Family law craves finality”.   Indeed, if faced with a flood of applications, they may be even stricter in their interpretation of what does constitute a Barder event as a matter of public policy.  In any event, timing has always been vital in Barder, with the general rule being months not years (or no more than a year) which would suggest that Orders made outside a window of the six months leading up to March 2020 are likely to struggle on the facts. 
  
• It is also important to consider the long term and, as articulated by Cohen J inFRB v DCA (No.3) [2020] EWHC 3696 (Fam), most commentators believe that at some stage in the next couple of years the world economy will be back to where it was prior to the pandemic.  With the continuing success of vaccine rollout, any window of opportunity for litigants chancing their luck and seeking to capitalise as a result of the pandemic is growing ever smaller.