19 April 2017

What is the impact of Brexit or other "unforeseen" events on financial orders on divorce?

Earlier this month, the Evening Standard reported that a fruit farmer, Paul Mansfield, had sought permission to appeal an order requiring him to pay £12.2 million to his ex-wife, from total assets of c. £30 million. 

Mr Mansfield appealed the decision on two points: (1) that the impact of Brexit could undermine the valuation of the assets in the case (the referendum having happened between the hearing and the judgment being handed down); and (2) that the judge had not properly considered the contribution of Mr Mansfield's father to the farming business, which comprised a large proportion of the assets.

Mr Mansfield was granted permission to appeal, but only as to the second point, as the Judge said the Brexit argument was unlikely to succeed.

Whilst Mr Mansfield was not allowed to appeal the Brexit point, it raises an interesting question as to what may result in a financial order on divorce being re-considered. 

Ultimately, the threshold is very high.  Once a final order has been made by the Court, it is only possible to re-open matters in certain circumstances, one of which is a new event (the Barder principle).  This argument can only be pursued if the following conditions (all taken from Barder v Barder (1987)) are met:

  • 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 succeed.
  • those new events should have occurred within a relatively short time of the order having been made (unlikely to be a year, and more likely to be within a few months).
  • The application for leave to appeal out of time is made reasonably promptly in the circumstances of the case.
  • The grant of leave to appeal out of time would 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.

The new events must be unforeseen and unforeseeable (Cornick v Cornick) and meet all the conditions above.

Generally, price fluctuations after the making of the order (either up or down) will not amount to a Barder event.  Where assets depreciate due to external factors such as a global financial crisis (like Myerson and Horne, both 2009), the party affected is unlikely to be able to set aside the order under Barder.  The same principle is likely to apply to the consequences of Brexit.

Events have to be truly unforeseen and unforeseeable.  Death may be a Barder event, but only in specific circumstances.  For example, in Barder itself, the wife killed the parties' children and herself just five weeks after the order was made.  In WA (2015), the husband killed himself 22 days after the order was made.  Both events were Barder events.

Inheritance may also constitute an unforeseen and unforeseeable event, as may a change in housing needs.  In Nasim v Nasim (2015), an order had been made on the assumption that the two children would live with the mother.  Six weeks after the judgment, an incident happened resulting in the two children refusing to see their mother and moving to live with their father for most of the time.  This was held to be a Barder event.

If the Judge had allowed both of Mr Mansfield's appeal points, it would certainly have been an uphill struggle for him to convince the Court of Appeal that Brexit was unforeseen and unforeseeable.  A referendum had been on the cards for some time and although few anticipated the result, it was foreseeable given the binary nature of the referendum.

The Barder principle will only come into play when really exceptional events occur.  Otherwise, like Mr Mansfield (unless he succeeds on his other appeal point), most parties will be held to the terms of their financial orders.

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