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Final orders and closure in financial remedy proceedings in the wake of coronavirus

Can parties who entered into a financial settlement in the months leading up to the pandemic be assured of the closure they would ordinarily be almost…

With coronavirus taking such a swift and unexpected hold across the globe, can parties who entered into a financial settlement in the months leading up to the pandemic be assured of the closure they would ordinarily be almost certain of with a sealed financial remedy order? And what for those whose cases have not yet settled or reached a final hearing?

Are final orders always final?

When a financial settlement is agreed between parties or imposed by a judge, the final order normally signals the end of the process with all that remains being implementation of its terms.

If afterwards either party feels that the order was wrong, an appeal can be made to the court. This must usually be done immediately (usually within 21 days unless a shorter time frame is set out in the original order).

What happens in the event that circumstances change after the timeframe to appeal has passed?

This issue was dealt with in the case of Barder v Barder (Caluori intervening) [1988] AC 20, 1987 2 ALL ER 440 (1). In this case the husband was ordered to transfer to the wife his share in their family home upon the basis that she would live there with their two children.

Tragically, shortly after the proceedings, the wife killed the two children and committed suicide. The husband felt that in light of this the order was unfair and he applied to the court for permission to appeal out of time.

The court in dealing with his case set out four conditions that must be satisfied for such permission to be granted:

  1. 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 be granted.
  2. The new events should have occurred within a relatively short time of the order having being made.
  3. The application for leave to appeal out of time should be made reasonably promptly in the circumstances of the case.
  4. 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.

Following this case, an event that gives rise to the court granting leave to appeal out of time has been coined a ‘Barder event’.

Does a change to the value of an asset post settlement constitute a Barder event?

The test set out in Barder was further defined in the case of Cornick v Cornick (no1) [1994] 2 FCR 1189 which looked at the change in value of an asset since the date of the original order.

The judge set out three scenarios:

(a)          An asset which was taken into account and correctly valued at the date of the hearing changes value within a relatively short period of time owing to the natural process of price fluctuation;

(b)          A wrong value is put upon the asset at the hearing;

(c)           Something unforeseen and unforeseeable has happened since the date of the hearing which has altered the value of the assets so dramatically as to bring about a substantial change in the balance of the assets brought about by the order.

Of the three scenarios, it was stated that only (c) would give rise to leave to appeal out of time being granted.

It was made clear that the natural process of price fluctuation of an asset, however dramatic, would not be sufficient.

Will changes to asset values post coronavirus make recently made financial orders appealable?

Until cases start to come before the court we will not know what the courts’ approach to this will be, but it must be a possibility.

There were a raft of cases following the economic downturn in 2008. In Myerson V Myerson [2009] EWWCA Civ 282 an order was made leaving the husband predominantly with shares in his company. When the husband’s appeal came before the court the share value had fallen by around 90%. The appeal was refused upon the basis that the natural process of price fluctuation, whether in house, shares or any other property, and however dramatic, does not satisfy the Barder test.

Whilst this would appear to close the door on applications where the value of an asset has changed, even substantially, it is arguable that coronavirus was unforeseeable and unforeseen. The resulting measures taken by our Government and others worldwide are unprecedented and previously unheard of in our lifetimes.

Timing might be crucial

It was noted in Barder that the new event must have happened within a reasonably short time from the order being made and as such, if there has been a fundamental change to circumstances, it is important to seek advice without delay and to act urgently if lodging an appeal.

If my case is not yet settled, is it advisable to enter into a settlement now?

We are now aware that coronavirus is likely to have a major impact on our economy but we don’t currently know to what extent. The value of assets, particularly businesses, investments, property or pensions, could change dramatically and what seems like a fair settlement, taking the value of the assets as they are now, may not seem so, if asset values fluctuate substantially. Likewise, income streams for assessing ability to fund maintenance may change significantly.

It would be prudent to wait until restrictions are lifted and the economic effects can be more accurately seen and predicted.

If you decide to enter into a financial settlement now, this is a risk.

If I did settle now, and the situation changed significantly, would I be able to appeal?

Unlike settlements entered into prior to coronavirus being heard of, or at least prior to its impact being fully anticipated, you would now be doing so with full knowledge of the risk and as such, any attempt to appeal, in the event of circumstances changing, would be likely to fail due to it being foreseeable.

If you need advice, please contact any member of Weightmans’ family team or Natalie Smith at natalie.smith@weightmans.com.

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