Foreseeing the Unforeseeable – setting aside Financial Orders

Posted: 5th September, 2012

It would be nice some would say to have a crystal ball and know what the future holds. It could equally be said that if one were to know the future the present may well become an intolerable place to live.

In matrimonial law the act of endeavouring to crystal ball gaze hovers over cases like a bee around a honey pot. During the throes of negotiating financial settlements in divorce cases there is an element of endeavouring to look into the future at what the parties’ respective positions may be and how their needs will unfold as the years wind by. Agreements are made and orders imposed on these assumptions. What happens though when an event takes place that no one has foreseen and which by its very nature undermines the premise upon which a settlement was reached or an order  made? Can the parties go back to court and ask for the case to be looked at again on the basis of an appeal? The short answer  is ‘maybe’.

The criteria for a successful permission to appeal out of time was set out in the rather tragic circumstances of the case Barder v Caluori 1988.  The facts of the case briefly were that following the parties’ divorce an order was made by consent providing that the husband should transfer all of his interest in the matrimonial home to the wife who had care of their two children. Tragically the wife subsequently killed the two children and then herself. This event took place after time for an appeal had elapsed but before the transfer of the house had taken  place. The husband sought to appeal the order out of time. The wife’s mother sought permission to oppose the husband’s application as an intervener. The Judge granted the husband’s application to seek an appeal. The appeal was granted on the basis that the original Court Order was based on a then fundamental fact that a home was required for the wife and children. The circumstances that thereafter ensued completely invalidated the original intention of the Order.

The Court set out the criteria for a successful application to appeal out of time, namely:

• New events since the date of the Order which invalidate the basis or fundamental assumption upon which the original Order was made so that if permission were granted the appeal would very likely succeed.
• The new events should have occurred within a relatively short period of time of the Order being made, usually not more than a few months.
• The application seeking permission to appeal out of time should be made promptly.
• The parties who have acquired property which is the subject of the order should not be prejudiced. For example the application will get nowhere if the house has been sold.

Following the start of the world wide recession/depression, call it what you may, and the depreciation of various assets (property, shares, hedge funds, etc.) many have endeavoured to try and use the Barder case to appeal financial orders that were made during the boom times. See for example the case of Myerson where the husband agreed to retain his shareholding on the basis that the wife retained the copper bottomed assets i.e. property/cash etc. Following the downturn of the market the Myerson’s shares took a nosedive faster than a ride on Blackpool’s pleasure beach big dipper. Unfortunately for Mr Myerson the Judge refused his application. The fact that Mr Myerson could probably only now afford a weekend’s fun at a Butlins holiday camp was irrelevant. The Judge said orders could not be varied simply because of the vagaries of the market. There comes a point where litigation has to end.

The categories where a ‘Barder’ application may succeed are those where:

• An asset was wrongly valued at the original hearing and the correct valuation would have led to a fundamentally different Order being made
• Something unforeseen and unforeseeable has happened since the date of the Order which has altered the value of the assets so significantly and as a result has caused an imbalance in the assets brought on by the Order.

In the Myerson the case the Court took the view that it was a foreseeable event that shares could go up as well as down and as Mr Myerson had agreed to take that risk at the time he had to suck on his Blackpool rock and put up with it.

The waters however have recently been muddied by a change in the family procedure rules (rule 30.12(3) – to be precise). This rule states that the appeal court will allow an appeal where the decision of the lower court was either wrong or unjust because of a serious procedural or other irregularity in the proceedings of the court that made the original order. Clearly this position does not fit in with the Barder case where there was nothing wrong with the original Order. The fact that a case can be re-opened because of a supervening event is unique to family cases – it does not apply to civil cases. It is unclear with the introduction of this rule whether the intention was to fully undermine the principles in Barder which have been good law since 1988. Hopefully as more cases of this nature filter through the court system the law will become clearer – maybe!

By Helen Saggers, Family Law Solicitor