Whether you are attempting to negotiate a financial settlement voluntarily or you are embarking on legal proceedings to secure a divorce settlement, there’ll always be a degree of uncertainty about the final outcome.

Experienced family law solicitors can minimise the element of risk by analysing previous judicial reasoning, applying it to your situation and advising accordingly. But because each case depends on its particular facts you’ll never be completely sure what form the financial settlement will ultimately take. The certainty of a negotiated settlement that each side has agreed to is often preferable to the greater risk of going to court and relying on a judge to decide the financial outcome of your case.

Settlements will be based on house and other asset valuations made at a particular moment in time. Naturally the actual value will vary from time to time. But can such a variation – in the value of a house for example – lead to a divorce settlement being set aside?

Events beyond your control and financial settlements

External factors beyond the control of the parties inject a further element of uncertainty into financial settlement discussions. For example, what happens if the property market crashes during negotiations or shortly after a settlement has been reached? Or the stock market dips significantly so that the value of a pension or other matrimonial asset reduces considerably in value? Can a settlement be re opened? Or, if negotiations are ongoing can previously agreed house or stock valuations be re assessed?

The coronavirus pandemic in 2020 is another example that resulted in rapid and dramatic fluctuations in the property and stock markets. In a period of prolonged financial volatility is it possible to look again at already-agreed financial settlements?  From a legal perspective everything depends on the nature of the external event that has caused a change in your financial circumstances.

Let’s examine this further.

Can I object to my divorce settlement if the housing market crashes?

A spouse who agrees to buy the other’s share in the family home for £1million will understandably feel aggrieved if, shortly after the transfer is formalised the market crashes and the £1million share he or she has just purchased shrinks to, say £500,000. Would that spouse be in a position to ask the court to alter the arrangement so he or she can claw back some of the lost value?

Similarly what happens if a family business the value of which formed the basis of the divorce settlement is forced to close as a result of an event such as the Coronavirus pandemic of 2020?

The situation is exacerbated by the fact that very often one spouse will agree to take certain ‘safe’ assets such as the family home in the settlement while the other will opt to take on riskier assets such as shares or a business.

There are many obstacles to a successful application to set aside a financial order. After all, the court’s goal is to achieve finality when issuing a financial order. However in certain very limited circumstances it may be possible to ask the court to change an order that was made before some intervening event. The event relied on must be so significant that it fundamentally undermines the basis on which the settlement was originally reached. Such an event is known as a ‘Barder event’, following a case decided in 1987.

Does a market crash represent a Barder event that will enable me to set aside my divorce settlement?

To satisfy the Barder test an event must:

  • Invalidate the assumptions on which the financial order was made; and
  • Occur within a short period of time from the original order.

In addition:

  • The party wishing to change the order must apply to court as soon as possible after the event occurs; and
  • Any change to the order should not adversely affect a third party who has acquired property included in the order in good faith.

In a later case (Cornick) the court indicated that a Barder event must also be unforeseeable.

Historically, market crashes have not been considered ‘unforeseeable’. They have occurred regularly over the decades and are therefore fundamentally foreseeable, if unwelcome. Even an event such as a pandemic – not necessarily foreseeable in its own right – but the resulting market crashes could potentially be considered as foreseeable and so not be considered a Barder event. Obviously every case is different and you should always seek legal advice regarding your circumstances.


At Brookman we can offer practical advice on your divorce settlement. We have  extensive experience of complex cases and a clear understanding of the approach taken by judges when dealing with any challenge to a financial settlement. Please call on 44 (0) 20 7430 8470 or contact us online.

 

 

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