What is the impact of the COVID 19 pandemic on existing financial orders?

What is a Barder event? Named after a tragic case in 1987, a Barder event is an event that is unforeseen or unforeseeable which fundamentally undermines the basis upon which a concluded financial order was made.

In the case of Barder v Barder , the family home was transferred to the wife to provide a home for herself and the children pursuant to a court order. Sadly, only five weeks after the transfer, the wife killed the parties’ children and took her own life. She left all of her assets (to include the family home) to her mother in her Will. The husband subsequently sought to appeal the court order on the basis that the death of his wife and children fundamentally undermined the basis on which that order had been made. He was successful.

Criteria for a Barder event

The case of Barder set out four key conditions which would have to be satisfied in order to succeed with an application to overturn or challenge a concluded financial order. These are:-

• New events have occurred since the order was made that invalidate the basis or fundamental assumption on which it was made;
• The new events occurred within a relatively short time of the order being made;
• The application for leave to appeal out of time is made reasonably promptly; and
• The interest of third parties should not be prejudiced.

Furthermore, as defined in the case of Cornick v Cornick [1994], the “new event” must be unforeseen and unforeseeable.

Is Covid-19 a Barder event?

Barder applications are notoriously high risk and the majority of applications which have been made have been unsuccessful.

Cases that succeed will be rare and exceptional and Judges are keen to ensure finality of litigation. Indeed, Hale J commented in the case of Cornick v Cornick [1994] that “once a couple were divorced and their capital divided, they could not normally expect to profit from or lose by later changes in the other’s fortune.” In the case of Myerson v Myerson [2009], it was further held that the 2008 financial crisis was part of natural process of price fluctuation and therefore did not constitute an unforeseen and unforeseeable event.  

Was Covid 19 foreseeable?

One could argue not. This has been a worldwide pandemic the likes of which none of us have seen in our lifetimes before. The impact of the pandemic on household finances has been more far-reaching than the 2008 global financial crisis. Furthermore, the fiscal policies introduced by the UK Government in response to the pandemic have been unprecedented to say the least.

Establishing whether or not an event is Barder event will very much depend on the facts of each individual case. It is worthwhile noting that simply suffering financial loss as a consequence of the Covid-19 pandemic is not sufficient grounds to reopen or challenge a concluded financial order. The courts are very likely to take a cautious approach when considering Barder applications to avoid opening up the floodgates to a wave of cases.

In truth, it is currently unknown whether the coronavirus should be treated as a Barder event. Only time will tell.  For any application to have a fighting chance of success, the Barder event ought to have occurred within a timeframe of no more than 12 months from the date the original concluded financial order was made.

Written by Anila Naeem

If you would like to discuss any of the matters raised in this article, please contact Anila Naeem at anaeem@judge-priestley.co.uk or any member of our family team.