For better, for worse, for richer, for poorer

Back in August 2020, which seems like a lifetime ago, my colleague Charlotte Posnansky wrote about the potential impact of Covid-19 on asset values and whether this might be the sort of change of circumstances that could constitute a ‘Barder event’ such as to persuade the court it is appropriate to reopen an otherwise concluded case.

In the early stages of the pandemic family lawyers waited with bated breath to see how the courts would react, if the floodgates would be opened, and whether Covid-19 would unravel hard work and deprive people of the finality of court-approved agreements and even orders made at a final hearing.

In the recently-released judgment of FRB v DCA (No. 3) [2020] EWHC 3696 (Fam), Mr Justice Cohen dealt with an application made in September 2020 to vary a final order made in March 2020 on the basis that the pandemic was a Barder event and the husband’s assets (including interests in hotel, airline, and care home businesses) were affected by the economic consequences of the Covid-19 pandemic such that he was unable to make the lump sum payments ordered by the court due to “the enormous reduction in my financial worth”.

On the face of it, this certainly had features that would bolster an argument in support of a ‘Barder event’ – the final order was made proximate to the significant impact of Covid-19 on financial markets and before the true extent of the impact of the pandemic, economic or otherwise, was known.  The Court was, however, not persuaded. 

This judgment emphasizes just how hard it can be to reopen a final financial order.  Family practitioners and clients alike should breathe a sigh of relief to see just how highly the English Court values finality and certainty.

In our discretionary system, each case turns on its facts.  In this case, that the husband seeking to vary the final order had been the subject of negative findings about his disclosure and honesty in the original proceedings, and the Judge was not persuaded by his evidence of the aforementioned “enormous reduction” in his financial worth.  Furthermore, in March 2020, the Judge had refused the husband’s request to defer judgment until September 2020 on the basis that the economic effects of Covid-19 could undermine the order.

Lastly, it is worth noting that, in his judgment in March 2020, the Judge had raised the possibility of there being a transfer of assets between the parties so that the husband had the option of converting some of the award he had to pay from cash into shares – he chose not to take up that invitation.  This timely reminder of how hard it is to unravel final financial orders emphasizes the importance to family practitioners of advising their clients about the perils of taking on the risk-laden assets.