Cv causing divorce problems

[Clitheroekid]

An interesting aspect of the CV problem is whether a divorce settlement entered into but not yet implemented can be set aside. In legal terms, the question is whether CV amounts to a ‘Barder Event’.

A ‘Barder Event’ is an event that happens shortly after the making of a divorce financial remedy order that undermines the whole foundation of the order.

For example, assume a very typical deal whereby Mr and Mrs Johnson had agreed a financial settlement in December 2019. Under the settlement, Mr J kept his business, valued at £1m, in his sole name along with the substantial income it produces, and it was agreed that he would not have to pay Mrs J any maintenance.

In return Mrs J kept the matrimonial home, valued at £500k, and cash and investments also worth £1m, so that there was a clean break.

But now we're in April 2020, and Mr J has now been told by the Government that he has to close his business for the foreseeable future. This could well mean that the business is now worth nothing. Even worse, the business may not survive at all, leaving him with no income and nothing from what he and his wife had built up during the course of the marriage.

But Mrs J still has her house, as well as the cash and investments.

The settlement is now a disaster for Mr J. He would never have agreed to such a deal had he known what was coming, and a Court would never have approved such a manifestly unfair deal anyway.

A similar thing may happen where one party has agreed to pay maintenance to the other. The paying party may well have lost their job or had to close the business that was to provide the means of payment.

'Barder Events' are so named because the case that first raised the issue was that of Barder v Barder, in 1988. It started out as a fairly conventional deal, whereby it was agreed that Mrs B would retain the matrimonial home for herself and the two children, and Mr B would transfer his interest in the home to her.

Unfortunately, just 5 weeks after the final order was made by the Court to reflect this agreement, Mrs B killed both herself and the two children.

Her Will left all her property (by now including the former matrimonial home) to her mother.

Perhaps not surprisingly, Mr B applied to set the order aside, on the basis that the death of his ex-wife and children undermined the whole foundation on which the order had been made. He succeeded.

However, the threshold for setting aside an order is very high - in 15 reported applications made since 1992 only 3 have succeeded. The courts are extremely anxious to achieve finality in divorce cases, and the last thing they want to encourage is people coming back because things didn't turn out as they'd hoped.

One of the best known of these cases was Myerson -v- Myerson - https://www.bailii.org/ew/cases/EWCA/Civ/2009/282.html

Mr and Mrs M had between them around £26m, and the split was £11m to her and the balance to him.

His wealth was largely comprised of a shareholding in an AIM company (yes, you know what's coming!) called Principle Capital Holdings Ltd. At the time the consent order was made, in March 2008, these were worth around £2.80 each.

Unfortunately, as a result of the credit crunch these had dropped by March 2009 to just 27p.

Mr M accordingly went back to the court, arguing that the credit crunch had been totally unforeseen, and that the order should be set aside and renegotiated. The Court of Appeal were unsympathetic, saying "the natural processes of price fluctuation, whether in houses, shares, or any other property, and however dramatic, do not satisfy the Barder test."

One can't help reflecting that this was a decision made by three aged Appeal Court judges, who were on generous salaries and looking forward to an equally generous index-linked pension!

It will be extremely interesting to see whether the "natural processes" of the CV-19 virus do satisfy the Barder test, though any ex-spouse who decides to take the risk will have to be brave and/or have deep pockets, as it could very well end up in the Supreme Court.

[Lootman]

the threshold for setting aside an order is very high - in 15 reported applications made since 1992 only 3 have succeeded. The courts are extremely anxious to achieve finality in divorce cases, and the last thing they want to encourage is people coming back because things didn't turn out as they'd hoped.

It will be extremely interesting to see whether the "natural processes" of the CV-19 virus do satisfy the Barder test, though any ex-spouse who decides to take the risk will have to be brave and/or have deep pockets, as it could very well end up in the Supreme Court.

Divorce cases should be very close to final, for some obvious reasons. For instance it is my understanding that even if the couple lied about being truly separated, and perhaps divorced only for tax reasons, the divorce is not set aside in that case. Even though the divorce was issued as a result of lies and omissions, it still stands and the only remedies are financial. Otherwise imagine the mess if one of them re-married.

As for a Barder event, it seems to me that parties negotiating a divorce should take risk into account. So that, say, a million in an AIM company is worth less than a million pound home in a leafy part of Surrey. I might take a worse deal because the assets I end up with are of higher quality and security. I should not be punished for that.

More generally the law can be an ass when it is applied retrospectively. There would be a chunk of moral hazard involved if people knew they could go to court and get prior agreements reversed just because of "events".

And if such retrospective judgements are made, there should be a strict time limit, which is presumably why you mentioned the "shortly after" phrase. If this becomes common and easy, then perhaps assets should be placed into escrow for the duration of that short period. Otherwise there might be an incentive for one spouse to skip the country rather than risk losing their share.