Family lawyers look at Financial Implications of Ruling which says Pandemic is a Potential ‘Extraordinary’ Event

A recent court ruling has thrown into the spotlight the potential for the reopening of settlement agreements reached during divorce proceedings, due to changes in circumstances caused by the Coronavirus pandemic.   

The case of HW v WW looked at whether the pandemic was a suitably ‘unforeseen and unforeseeable’ event which could lead to financial orders being set aside. Family lawyers are now looking at the implications of the ruling for separating couples.   

Partner and family law specialist Chris Longbottom, from national law firm Clarke Willmott LLP, says although in this case the husband’s application to set aside a financial order made on divorce was refused, the court did recognise the impact of the pandemic as a potential extraordinary event.  

Chris said: “The coronavirus pandemic is entirely unprecedented. There has been speculation for some time, since the beginning of the pandemic in March 2020, about the impact of the pandemic on financial orders made on divorce and whether the pandemic and its impact on asset values satisfied the test in Barder v Barder, in order to justify the setting aside of a final order.  

“A so-called ‘Barder’ event is where something happens shortly after an order is made which undermines the basis of the order itself and opens the door to allow an application to set aside the order. 

“The judgment in this case has helpfully decided the impact of the virus on financial orders made on divorce is a potential ‘Barder’ event and likened it to a war in terms of its extraordinary nature and scale in our lifetime.  

“Although confirming the potential, in this case, the circumstances did not satisfy the established test. The court did not accept the husband could not have foreseen the impact of Covid on his business and also given there was evidence supporting a recovery of the business profitability, the existing order was not set aside.  

“If the case had gone before the court with stronger evidence, the outcome might well have been very different for the husband.”  

Emily Finn, a solicitor with the family team at Clarke Willmott, says although the position has finally been tested in the HW v WW law case, the bar to establish a ‘Barder’ event still remains very high.  

“Public policy dictates the principle of finality should apply to court orders,” said Emily.  

“The event must have been unforeseen and unforeseeable at the time the order was made, must invalidate the basis on which the order was made, and must have occurred within a relatively short time after the order – usually no more than a few months.  

“So, it is important if you are affected, to take advice urgently. Any application to set aside a financial order needs to be made promptly.”  

In the case of HW v WW, His Honour Judge Kloss, indicated the agreement was sensible and fair.  

He said it was obvious from the terms of the order the husband could only pay the lump sums to the wife by using the company cash reserves and/or using the company to borrow funds.   

The question on the application to set aside the order was whether the fall in the company’s performance and value post the pandemic justified the order being set aside.  

In Barder v Barder (1988) the husband was ordered to transfer all his legal and equitable interest in the matrimonial home to the wife who cared for the parties’ two children.   

Shortly afterwards the wife killed the two children and committed suicide. It was held this was a new event that invalidated the basis, or fundamental assumption, on which the order was made.  

Clarke Willmott has recently launched an online tool to help people thinking about getting a divorce or a civil partnership dissolution. The ‘Parting Ways’ tool is a free digital toolbox available to everyone and developed by the firm’s family team as a first port of call for people before speaking to a family lawyer.   

It takes a few minutes to complete and guides the user through a series of questions before generating a free report and route map that is tailored to their responses. It does not ask for any personal information and gives a high-level legal overview of common situations.    

To find out more or to access the tool visit www.clarkewillmott.com/parting-ways    

Clarke Willmott specialises in all areas of private family law and has offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton.