Consent Orders Financial Remedy Proceedings

Is Covid-19 a Barder Event sufficient to set aside a Consent Order?

Does the financial fallout from Covid-19 on your assets and income qualify as a an ‘entirely unforseen’ Barder Event?

A ‘Barder event’ is basically an unforeseen event which invalidates the fundamental basis on which a financial remedy order has been made. A ‘Barder Event’ can give rise to an application to Court asking for a consent order or a final order to be changed.

Reading the above sentence it may seem straightforward. However; these types of applications to the courts have a notoriously high threshold for success. There are many hurdles to be crossed, including showing that the Barder Event occurred shortly after the original order was made and, that the application to set that order aside is being made promptly. Perhaps the biggest hurdle is to prove that the ‘Barder Event’ was entirely unforeseen!

One question we have been facing more and more in the past 12 months is whether the coronavirus pandemic fits these criteria? In other words, does the financial fallout from Covid-19 on your assets and income qualify as a an ‘entirely unforseen’ Barder Event?

It comes as no surprise that as a consequence of the Covid-19 pandemic many businesses have dropped in value, incomes for some people have reduced significantly and there have been a significant increases in redundancies. If you have had a financial remedy order made against you which was based your net worth prior to the pandemic, you need to consider two specific questions:

  • Has the Covid-19 pandemic changed your financial wealth so immensely that the order of the court is now based on an entirely different scenario to the one which exists now; and
  • Would the courts accept the changes to your assets or income as a Barder Event?

To answer these questions we have to look at what the courts have been saying and deciding in recent cases. When higher level courts make decisions on matters like this, they set up what is called a ‘precedent’. Precedents are then used by the lower courts to help them decide new cases as they arise.

So what are the new ‘precedents’ and case law saying about the impact of Covid-19 as a Barder Event?

It was precisely this scenario which arose in the recent case of HW & WW, 2021 EWFC B20. In this case, the husband was the Managing Director of a wholesale distributor of printers and computer software which was worth about £3.5 million in March 2020. That was when the financial remedy order had been made by the court and the husband had been ordered to pay a large lump sum to his soon to be ex-wife.

By the time the husband was due to pay the first part of the lump sum payment of £750,000 to his ex-wife in June 2020, the pandemic had greatly reduced the income and commercial prospects of his company. The husband did not make the payment and instead he applied to the court, asking them to set aside the original financial remedy order on the basis that the pandemic had financially negatively impacted him and consequently a Barder event had occurred.

The Court agreed that the pandemic was an “extraordinary event, different in nature and scale, to any similar world event in the lifetime of the parties”. The court also went on to say, in principle, that the COVID-19 pandemic “can open the door to a successful Barder claim”.

However; in this particular case the husband’s application was still rejected on the basis that the effect of the pandemic had been ‘reasonably foreseeable’ in March 2020. One of the factors which the court took into consideration was that at the time they had made the March 2020 Order, the pandemic was just beginning to show the impact that it could have on the economy and this particular court felt that it was ‘reasonably forseeable’ in March 2020 that the husband’s income would decline in the short term. But that was a factor specific to this case.

Not all cases will have been decided at the same time or indeed, with the same amount of information being available to them, when the original order is made. If anything, this decision underlines how Barder Event cases are very dependant on the specific facts of each individual case.

So What Does This Mean For Me?

Whilst the court in HW & WW decided that the pandemic did not constitute a Barder event in this particular case, the judgment suggests that the financial fallout from the Covid-19 pandemic can potentially be a Barder event in a different appropriate situation. However; as always what is clear is that the courts are not easily convinced of Barder Events and the bar for establishing that a Barder event has occurred is set very high.

Cases where the Covid-19 pandemic is held to have been a Barder Event will be few and far between. However; if nothing else, this case underlines the importance of assessing such cases carefully, based on their own individual facts and circumstances.

If you feel that the financial effects of the Covid-19 pandemic have been so significant and unforeseeable, on your personal financial circumstances, that you might have grounds to challenge a consent order or final order made before the pandemic, contact us and we can arrange a thorough assessment and consideration of your circumstances and your case.