Facts: After a 4-day financial remedies trial, DJ Hudd, handed down judgment on 10 October 2019. H owned and managed a school-meals business. It was agreed that he would retain the business and that W’s award would be made up of hard assets. The total assets of £4.75m were divided 58/42 in favour of H, to reflect two factors; first, that the business predated the marriage and therefore to some extent had a non-matrimonial constituent: second, the shares in the company were characterised as having an element of risk and not comparable to cash in the bank.
In order to effect the 58/42 split, the DJ ordered H to pay £950,000 in a series of lump sums commencing with £150,000 commencing on 1 November 2019, followed by four payments of £200,000 at yearly intervals commencing on 1 November 2020 and ending on 1 November 2023. Tapering spousal maintenance in lieu of interest was ordered against H until payment of the final lump sum. H was ordered to pay child maintenance and school fees for the parties’ two children aged 17 and 15.
In February 2020, the Covid-19 pandemic reached England and shortly thereafter the country went into lockdown. In March 2020, all schools were closed. On 27 April 2020, H applied pursuant to FPR r9.9A to set aside parts of the final order.
He contended that the arrival of the pandemic was both unforeseen and unforeseeable, and that its impact had caused devastating financial consequences which invalidated the fundamental assumptions on which the final order was based. As a result, he claimed that he was unable to discharge his unpaid obligations under the order. He sought their setting aside, with the matter to be looked at afresh, in the context of the new financial landscape.
At an interlocutory hearing, the court directed that a hearing should be listed before a High Court Judge sitting in the Family Court to determine the following preliminary issues:
Is Covid capable of being a Barder event?
Has the applicant established sufficient grounds to set aside the final order whether in part or in full?
One suspects that it was more than mere chance that, in due course, the application found its way into the lists of Mostyn J.
Outcome: In a carefully crafted judgment, Mostyn J refused H’s application to set aside the final order of DJ Hudd. In reaching that decision, Mostyn J gave guidance on a number of interesting and important points of law and procedure.
The framework of the judgment is provided by the well-known four conditions set out in the famous case of Barder v Barder [1988] AC 20, the case in which shortly after a final order, the wife had tragically murdered the children of the family before taking her own life. The husband in that case had then successfully applied to set aside the final order, on the basis of the supervening events. The House of Lords set out the well-known four conditions for relief, which were reproduced by Mostyn J at [7].
To that list, Mostyn J added a 5th condition, namely that the applicant must demonstrate that no alternative mainstream relief is available to him which broadly remedies the unfairness caused by the new event [7]. He cited a number of authorities in support of that proposition.
In his analysis of the legal principles engaged in the case, Mostyn J also reminded practitioners:
The new event referred to in the decision in Barder must have been unforeseeable (and hence, necessarily, unforeseen). This phrase unforeseen and unforeseeable arises from the decision of Hale J in Cornick [1994] 2 FLR 530.
Whether an event was unforeseeable must be proved to the same standard as that required in the QBD when determining an issue of remoteness. An event is unforeseeable only if the probability of its occurrence is so small that a reasonable person would have felt justified in neglecting it or brushing it aside as far-fetched.
As Mostyn J had pointed out in his earlier judgment in DB v DLJ [2016] EWHC 324, at [36]-[41], that makes proving unforseeability a very difficult exercise. In that case, Mostyn J put it numerically as something less than a 5% chance: and he reflected on the outcome of the Wagon Mound litigation, in which the Privy Council had found that the fire was not unforeseeable, despite the very limited circumstances in which it might have occurred, and despite the finding of the trial judge himself (Walsh J) that it had indeed been unforeseeable. The Privy Council took the view that whilst the risk of occurrence may have been very small indeed, it was not such that a reasonable man would brush it aside as far-fetched.
Mostyn J went on in DB v DLJ to analyse a number of earlier reported cases in which the need to prove that the new event had been unforeseeable appears not to have received sufficient judicial scrutiny.
Even if an applicant satisfies the five Barder conditions, the court still has a residual jurisdiction to refuse Barder relief.
One reason for so doing, identified by Thorpe LJ in the Myerson litigation, was that the order complained of contained a framework and a solution to which the husband had agreed i.e. it was contained in a consent order. In Myerson, the husband had kept the (publicly-quoted) shares, W kept cash; the value of the shares had then plummeted, as a result of the financial crisis of 2008, leaving H in the red, and W with 105% of the assets. Even in that case, H was denied relief. He had made his bed; he must now lie in it. Thorpe LJ said:
‘When a businessman takes a speculative position in compromising his wife’s claims, why should the court subsequently relieve him of the consequences of his speculations by rewriting the baragin at his behest’
The fact that the order was a consent order was also one of the reasons advanced by the court for denying set-aside relief to the husband in HW v WW [2021] EWFC B20 (HHJ Kloss), another case involving a husband who had kept the business, whilst his wife received cash, then alleging that, as a result of Covid, he could no longer make the lump sum payments that he had been ordered to pay W. His set aside application was dismissed.
In BT v CU itself, the husband’s application was dismissed. Mostyn J answered the first question ‘is Covid 19 capable of being a Barder event’ with the answer probably not, but it will depend on the facts of the case.
On the facts of this case, the answer was a ‘no’. The essential reason was that this was not a new event, since it was not unforeseeable.
Mostyn J said [21] that, in answering that question, the court should principally focus on the economic impact of the event rather than its cause or nature. He found that the impact of the pandemic on H’s business had been not nearly so severe (net assets were up, cash at bank was up; there were merely unwelcome movements in turnover and in costs) as the devastating impact of the 2008 financial crisis had been on Mr Myerson. If it was right to deny relief to Mr Myerson, it could not be right to grant relief to the husband in the instant case.
If the movements described made it difficult for H now to fund the lump sum payments from dividends, he could/should instead look at financing solutions and/or to deployment of cash sitting in the business.
Although it was unnecessary to do so, Mostyn J went on to consider the other 4 Barder conditions. He found that the 2nd, 3rd and 4th conditions were satisfied.
Consideration of the 5th condition (does H have some other remedy) gave rise to an analysis of two important questions:
Could H invoke the Thwaite jurisdiction, given that the order remained executory (H having not yet paid the lump sum in full)?
Could H apply to vary the lump sum, as though it were a lump sum payable by instalments, notwithstanding that it had been expressed to be a series of (non-variable) lump sums?
In a magisterial survey of the development of the law in both areas, and pulling no punches, either in respect of previous first instance decisions, or in respect of higher authority, Mostyn J endeavoured a spring clean of two particularly dusty and long-controversial corners of the law.
As to the Thwaite jurisdiction, he came to the view, increasingly shared by parts of the profession, that Thwaite is not a jurisdiction which properly enables a court to re-write a capital order; that if the Thwaite jurisdiction did do so, it would have been used to do so in the case of Barder itself (the decision in Thwaite pre-dating Barder by 5 years or so). The only jurisdictional basis for the re-writing of a capital order (aside from the traditional grounds of non-disclosure, mistake etc) is the Barder jurisdiction, and the Barder conditions (which, together with foreseeability, play no role in the Thwaite test) must be strictly adhered to.
Mostyn J had tried to say the same in SR v HR [2018] EWHC 606, where he had said that the principle in Thwaite should be approached extremely cautiously and conservatively, but his coded language [51] had attracted no judicial adherents. He indicated [63] that he did not agree with any of the recent first instance decisions which have taken a different view, and that the most recent authority of the Court of Appeal, often cited, that of Bezeliansky [2016] EWCA Civ 76, is not a binding authority at all, since it was a decision refusing permission to appeal which had not been certified in accordance with the relevant Practice Direction (Citation of Authorities) [2001] 1 WLR 1001.
It will be very interesting now to see what the Court of Appeal make of the view of Mostyn J, which view is shared by a respectable body of the profession.
As to the issue of variation of the lump sum, Mostyn J came to the view that there was indeed jurisdiction for H to apply for a variation of the lump sum, though only as to the calibration of the payments (timing and size of instalments) and not as to the overall amount. Consequently, this jurisdiction did not provide an adequate other remedy for the purposes of the 5th condition of Barder [98].
He found that that was the full extent of the s31 jurisdiction to vary, and that any aspiration to interfere with the size of the lump sum itself could only be achieved by Barder or other set aside grounds [97]. He also found that the jurisdiction to vary the calibration of the lump sum payments arose notwithstanding that the order had been deliberately expressed as being for a series of lump sums, and not, on its face, a lump sum payable by instalments. That was just a piece of window-dressing, said the court, a piece of camouflaging language – objectively, it was a lump sum payable by instalments [96]. A genuine (non-variable) series of lump sums is, said the court, a number of lump sums, ordered to be paid at different times, in difference sums, and each designed for different purposes, such as was described by Sir George Baker P in Coleman v Coleman [1973] Fam 10.
Finally, on the question of preserving the anonymity of the parties, for the purposes of the reporting of this case, Mostyn J announced a sudden and sharp U-turn from his own, and generally widespread, practice, of granting that request. He conducted yet another analysis of the origins of the current general practice, and decided that it had no proper basis. He was persuaded to grant anonymity to these parties, only because they were taken by surprise, and had a legitimate expectation that the general practice would be followed, but he warned that from henceforth he would need good reason, probably related to the facts of the specific case before him, to be persuaded to do so.
John Stocker