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When is a final order not a final order?

The recent case of Critchell v Critchell [2015] has raised once again the question over what circumstances may qualify as a “Barder event”, in order that one party can reopen what was intended to be a final order.

As a general principle, although maintenance orders are always variable, a financial order in respect of capital (e.g. house, cash and investments, pensions) is normally absolutely final. There are very limited circumstances in which this may not be the case e.g. fraud, non-disclosure, an appeal on the merits of the order made.

One circumstance where a final order can potentially be reopened is on the happening of a “Barder event”. A Barder event is where something happens shortly after an order is made which undermines the basis of the order itself. It is named after the very distressing case of Barder v Barder (Caluori intervening), which was decided in 1988. In that case, it was decided that the wife needed to retain the family home, as she would be looking after the two children of the marriage for the foreseeable future and needed the marital home in which to do so. The husband was therefore ordered to transfer his share of the house to the wife. Tragically, only 5 weeks after the order was made, the wife killed both the children and then herself. She had made a will leaving all her assets to her mother. The mother sought to enforce the order, but the husband sought to appeal the order out of time (i.e. beyond the time limit for so doing), on the basis that the death of the wife and the two children invalidated the basis of the order and was successful.

The Court set out 4 criteria which had to be met, in order for obtain leave to appeal out of time on the basis of a Barder event, as follows:

1. That the new event which had occurred invalidated the basis for the order or the fundamental assumption on which it was based, so that any appeal was certain or very likely to succeed;
2. The new event had taken place within a short time period after the order was made (there is no specific guidance as to what this means, but it is generally understood that it should ideally be measured in weeks, not months, and in any event be less than a year at the outside);
3. That the application to appeal out of time had been made promptly after the event took place;
4. That granting leave to appeal would not prejudice any innocent third parties (if, say, a house had been sold to a third party unconnected buyer, this would not be set aside).

However, there is an important point of public policy in ensuring that there is finality in litigation, so that parties feel confident that they are able to move on and be sure that the cost and stress of litigation is behind them. The Court was therefore keen to stress that it would be rare for events to meet these four criteria and indeed very few cases have succeeded to run a Barder argument since the original case in 1988.

The recent case of Critchell v Critchell is one case which has successfully run a Barder argument.

This was a small money case where the only asset seemed to be a matrimonial home worth £190,000 with a £10,000 mortgage. Additionally, the husband had bought a property for himself, with a loan of £85,000 from his father and a mortgage of £63,000. He therefore had a debt to his father of £85,000. Neither party had much in the way of income. By agreement, the parties entered into a court order which provided that the matrimonial home would be transferred to the wife (as she would be bringing up the two children of the family, aged 14 and 12), but that there would be a charge against it, in favour of the husband, as to 45% of the equity. The husband would be able to redeem this charge on the first to occur of various events, including the youngest child reaching 18, the wife’s death, the wife’s remarriage or cohabitation for over 6 months or the sale of the property.

Within a month of the order being made, the husband’s father died, leaving him the sum of £180,000. The husband was therefore suddenly in the position of being debt free to his father and being able to pay off his mortgage, leaving him with a mortgage free property and £117,000 in cash.

The wife therefore appealed the order, on the basis that the husband’s father’s death constituted a “Barder event” which undermined the basis of the order. The Court of Appeal agreed with her and made an order which extinguished the husband’s charge against the matrimonial home altogether. As there were no other matrimonial assets, this had the result of leaving the wife with the entirety of the capital. Having said that, the husband would still be left in a better financial position than her, as not only did he now have a mortgage free property, but also £117,000 in savings. The wife had a property with a small mortgage and no savings. The Court clearly took the view that in these circumstances, to leave the charge in place and force her to sell the property in due course to repay the charge, potentially leaving her with financial difficulty in rehousing, would not be fair. It is worth noting that the Court did not give the wife any share in the inheritance money itself and its receipt only altered the division of the matrimonial capital between them.

It is clear that Critchell is a case which was decided on its specific facts, particularly the fact that there was so little money to go round in the first place. This was a “needs” case and the original order had been made on the basis that the wife needed to continue to live in the house with the children but that the husband would, in due course, need money out of that house in order to reduce his own debts. The death of his father effectively removed this need altogether and rendered the husband financially secure without any equity from the matrimonial home.

The Court was again at pains to emphasise the rarity of cases such as this and the fact that Barder events would continue to allowed as a basis for appeal out of time in very restricted circumstances. It seems clear from the judgment that the receipt of an inheritance shortly after an order in very different financial circumstances, where need was much less of a factor, should not succeed as a Barder event.

While it is the case that receipt of an inheritance (or a lottery win, etc) shortly after the making of a court order clearly cannot be described as completely off-limits, it is clear that in the vast majority of circumstances, the reality is that the Court would not agree to reopen a final order unless the new event truly did undermine the entire underlying basis of the Order.

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