In the second of our series of interviews with Ann Hussey QC on the potential implications for final financial orders occasioned by the COVID-19 outbreak, Manders Law Managing Partner, Mary-Ann Wright, speaks to Ann Hussey QC on the pressing questions that clients want answered. If you have recently concluded your financial proceedings by way of a consent order or following a final hearing, the information below will be of relevance to you.
About the interviewee
Ann Hussey QC specializes in high net worth divorce, separation and pre and post nuptial agreements. She is instructed by husbands, wives and separating unmarried couples and advises offshore asset holding entities. Ann regularly lectures on financial remedies both in the UK and internationally.
Are final orders ever really final? My circumstances have changed as a result of COVID-19
Orders made, whether by consent or by the court, to conclude a financial remedies claim are meant to be final. The courts have for a long time demonstrated very limited appetite for changing orders save in very limited circumstances. As has been repeatedly emphasised there is a public interest in finality to litigation.
There will of course be couples who have just concluded the process either by consent or through the courts, who are finding, that as a result of the pandemic, their circumstances are different.
Is there anything that can be done?
Unsurprisingly there have been several cases over the years where an event has happened after a court order, which has led one of the parties to mount a challenge to the original order.
The circumstances in which a change to the order can be achieved are very rare and the facts extreme. The original case on this point is known as Barder and involved a tragic set of circumstances. In short, only 5 weeks after the family home had been transferred to the wife, in order to provide a home for herself and young children, she killed the children and committed suicide. The husband succeeded in his challenge to the order and successfully appealed it out of time.
These facts of the Barder case are clearly exceptional. What test does the court apply to other cases, where perhaps the facts are less compelling and unusual?
The Barder case did indeed set out a test and makes clear what needs to be established before the court will permit an appeal out of time. There are four points to carefully consider with your legal advisers:
- The new “event” needs to be such that it invalidates the order, meaning that the appeal is very likely to succeed. In the Barder case, the death of the wife and children totally invalidated the assumption that she was going to need to provide a home for the children for many years.
- It needs to have happened within a very short time – this is crucial
- The applicant needs to appeal promptly
- The granting of leave should not prejudice third parties, who have acquired an interest in property for value and in good faith.
It seems likely that many families will be experiencing fluctuations in valuation, either to businesses, portfolios, or properties, in addition to the tragic possibility of untimely death, as a result of the pandemic. Would such fluctuations be sufficient to mount a challenge?
It is true that unexpected death has been a recurring theme in the cases which have come before the courts. One successful case involved the husband of a fabulously wealthy wife. He committed suicide 22 days after the order was made. However, the lump sum she was ordered to pay was reduced, but not extinguished altogether. The cases involving death will depend on whether the award was made because the receiving party needed it, in which case, if the “need” has gone the challenge will be easier. If, however, the award was based on “sharing”, the receiving party earned it and therefore it can be dealt with by his/her testamentary wishes in the event of untimely death.
There will inevitably and tragically be further cases involving untimely death as the result of this pandemic, and depending on the basis of the award it may be susceptible to a challenge.
As for fluctuations in valuations, this is not new territory. After the 2008 financial crash, devaluation was argued to be an event that could trigger a successful appeal. In the most dramatic of these cases, Mr Myerson argued that the order should not stand because the business, which he kept under the terms of the order, had fallen 90% in value. You might think that such a huge change would have been sympathetically viewed and enable him to appeal. He failed. The court held that natural fluctuation in value, even one this dramatic was not enough.
Is the outlook entirely bleak for those clients with recent orders where values have fluctuated?
No- it is vital to remember that whilst any crisis brings failures, there are also cases where a parties’ finances have dramatically changed for the better. What then? Let me give you an example. In one case a debt of £14m subsequently reduced to £600,000. In another, a business valued by the husband at £129,999 was sold for £1.6m. Neither order was successfully challenged.
There was however one change in fortunes, which did result in a change. Mr Critchell transferred the family home to his wife, and he was not to receive his share until the youngest child had completed education. On the eventual sale he would be able to extinguish the debt he had taken on to buy himself a home. However, very shortly after the case concluded his father died and he inherited enough to clear his debt and have a surplus. His wife successfully argued he no longer had a “need” for the eventual sale of the house. The court did however state that it was the timing that was critical here, and that if his inheritance had been many years later she would not have succeeded.
So, what conclusions can we draw?
The courts have again and again reiterated that the circumstances in which a party can successfully appeal out of time will be very rare indeed. Clever arguments to try to get over the high bar set will be rigorously scrutinised. Lord Justice Thorpe said in one case that these cases are “exceedingly rare” and should not be “extendable by ingenuity”.
So, we have been told. Whilst an appeal out of time might not succeed, a variation on time to pay lump sums, or execute property sales, is likely to be met with greater success.
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Note: this blog is intended to give an overview (rather than comprehensive guidance and advice) on your legal position.