Judges who make financial orders in divorce cases (or approve a privately agreed settlement) want the provisions to have finality. Enabling the parties to put the breakdown of the marriage behind them and get on with their lives is the priority. Following on from this, it’s no surprise that if one party subsequently wishes to change the terms of a financial order (for example because they lose their job, or their financial circumstances have changed for some other reason) courts will not entertain such a request lightly.
The 2021 case of BT v CU shows this clearly. There a husband failed to persuade the court that Covid19 had so disrupted his finances that he should be relieved of his obligation to comply with a lump sum payment schedule he had been ordered to make in his 2019 divorce proceedings.
Variation Of A Financial order
If, after your divorce, your financial circumstances change and you find it difficult to meet the terms of a financial settlement relating to maintenance, lump sum or other payments then you have two options:
- You can try to reach an agreement with your spouse to change the existing payment regime. Do this before you breach any existing court order and ensure you record any agreement you make with your spouse to reduce or change the payments you are required to make.
- Alternatively, you can ask the court to modify the agreement.
Before going down the family court route you should consider getting legal advice because courts are reluctant to alter financial orders. They will only do so in exceptional cases. A specialist family lawyer should be able to give you a good indication as to your chances of successfully varying an order before you incur significant court costs and other legal fees.
When deciding to change an existing financial order the courts apply what’s known as the ‘Barder’ principle, named after a 1987 case. In short if you are seeking to change a financial order you must be able to rely on an event that has had the effect of fundamentally undermining the entire basis on which the original order or settlement was made. Other elements of the Barder rule include:
- The event relied on must occur within a short period of time from the original order
- The requirement that the party wishing to change the order must apply to court as soon as possible after the event occurs
- The requirement that any change to the order should not adversely affect a third party who has acquired property included in the order in good faith
- The event must be unforeseeable. Note that the fall in value of an asset like a house will usually be viewed as the foreseeable consequence of normal market fluctuation
As we’ll see, the circumstances in which the courts will apply the Barder rule to overturn a financial order are extremely limited.
Covid19 And The Limitations Of Barder: BT v CU, 2021
It’s important to note that a simple change in your financial circumstances won’t qualify as a ‘Barder event.’ Redundancy, arguing that assets have been over or undervalued in the financial settlement or a change in the value of a specific asset are not likely to amount to Barder events in themselves –although as in all family court cases each case will be decided in its facts.
The case of BT v CU examined a financial order made in 2019 under which the
husband was ordered to pay the wife £950,000 in a series of lump sums. These commenced with £150,000 on 1 November 2019 and were due to be followed by four payments of £200,000 at yearly intervals commencing on 1 November 2020 and ending on 1 November 2023. A substantial part of the husband’s wealth was derived from a business he had set up before the marriage providing school meals (this business didn’t form part of the financial settlement).
The husband argued that when all schools closed in March 2020 as a result of the Covid19 lockdown he faced devastating financial consequences. The lockdown invalidated the fundamental assumptions on which the final order was based. As a result, he claimed that he was unable to discharge his unpaid obligations under the order.
Mostyn J disagreed fundamentally, saying that Covid19 was ‘probably not’ a Barder event. His reasoning is significant because it helpfully sheds light on the considerations applied when deciding if an event is unforeseeable in the context of a Barder application.
Mostyn J was unable to accept that the events that caused the downturn in the husband’s income were unforeseeable or that they invalidated a fundamental assumption on which the original financial order was based. On the contrary, in Mostyn J’s view, a reasonable person would have said in October 2019 that there was certainly a chance, ‘which could not sensibly be ignored’, that in the next year there would be an economic downturn which would have the effect of reducing turnover and increasing costs in the husband’s business.
The judge also highlighted that the basis on which the financial order had been approved was that the husband would be retaining assets which were risky. It was for that reason he was granted a greater than equal share of the matrimonial pot. In taking on the risk – and a greater share of assets he could not in hindsight return to the court and ask for his financial obligations to be reduced.
Comment
Clearly, it’s difficult to get the courts to alter a financial settlement. If you are having difficulty meeting your obligations, it’s important to take a pragmatic approach. Be open with your spouse and, ideally with the help of lawyers, make a sensible revised payment schedule, perhaps on a temporary basis until your circumstances improve. And remember if you really are unable to discharge lump sums or maintenance as required you can always make an application to the court to delay payment.