Summary

HHJ Alexander Kloss sitting in Leeds on the 25-26/3/21 considered an application to set aside a final financial consent order reached between the Husband (H) and Wife (W) at an FDR on the 12/3/21 arising due a claim that the impact that the Covid-19 pandemic had had upon the value of the business which the H retained was a Barder event. 

Written by: MARIA SCOTLAND for Lexis Nexis PSL.

What are the practical implications of this case?

The court held that the Covid-19 pandemic is an extraordinary event, different in nature and scale to any similar world event in our lifetimes, akin to a war. In the circumstances the Covid-19 pandemic and its’ impact upon a key asset is a potential Barder event opening the door to set aside. So long as an application is made in good time of the effect of the pandemic being noted upon the value and liquidity of an asset an application has the potential to open the door to set aside.

What was the background?

The H was 53 years old and the W 49 years. They were married for 24-years. There were 3 children, one of whom was still a minor. The reached an agreement in the finances at the FDR. The assets included the family home and a second property with equity of £530K, debts of -£200K, pensions of £558K and a business in which both H and W held shares with a net value of £3.2 Million. The parties agreed that the H would retain the business whilst the W would retain the family home and the net proceeds of sale of the second property. The W agreed to transfer her shares in the business to the H on the basis that he paid her a series of three lump sums equal to £1 Million. The W would receive 40% of the capital and 33% of the pensions after a long marriage. The departure from the sharing principle was agreed on the basis that the W would retain the “copper bottom” assets whilst the H took the risk laden assets. The parties agreed to a clean break after 2 years. The H’s net income was £350K per annum. Whilst the H would exit the marriage with no liquid assets the greater % of the assets and clean break was clearly valuable to him. HHJ Kloss indicated that the agreement was sensible and fair. It was obvious from the terms of the order that the H could only pay the lump sums to the W by using the company cash reserves and/or using the company to borrow funds. The question on the application to set aside the order was whether the fall in the companies’ performance and value post the pandemic justified the order being set aside.

What did the court decide?
The court first considered the legal framework in an application to set aside a final order where no error of the court is alleged. The starting point is the well-known case of Barder v Barder (Calouri intervening) [1987] 2 FLR 480 and the four conditions under the case which have guided matrimonial practitioners ever since. The court also considered Hale J’s judgement in Cornick v Cornick [1994] 2 FLR 530 and the three possible scenarios that may arise when arise where an application is made to set aside an order on the basis that the value of an asset has fallen since the original order. The H argued that this case fell squarely within the third category, that is that the pandemic was a new “unforeseen and unforeseeable” event that had happened since the FDR and which had altered the value of the assets so dramatically as to bring a substantial change in the balance of assets divided under the Order. Myerson v Myerson (No.2) [2009] 2 FLR 147 was considered. In Myerson the Court of Appeal approved the Cornick categorisation and held that a new event need not be “concrete” but could “embrace happenings, developments or occurrences”.

The court held that the “event” is the Covid-19 pandemic and the consequential impact upon the value and liquidity of the company came within the “developments” expressly approved in Myerson. However, the court did not accept that the H could not have foreseen the impact of the pandemic upon his business nor that his business had “fallen off a cliff” but rather that the business remained viable and profitable, albeit on a smaller scale. As such the H’s application to set aside was refused. The H’s evidence to his bank seeking funding predicted a recovery of his business profitability which was supported by industry experts. Ultimately the court noted that the Barder threshold is deliberately set very high for sound public policy reasons to preserve the finality of litigation. The court noted that there had not been a Tsunami of Covid-19 pandemic Barder applications which tended to suggest that exceptionality is still holding good, even in difficult times.

Case details
• Court: Family Court
• Judge: HHJ Kloss
• Date of judgment: 26/3/2021

When an asylum seeker flees their home country then the Refugee Convention 1951 demands they are not refouled to that country to risk persecution. But when a child is abducted across international borders, the Hague Convention 1980 requires that the child is immediately returned to their habitual residence. What happens when that child, or the abducting parent, is also an asylum seeker? In the recent case of G v G [2021] UKSC 9, the Supreme Court considered the approach when these two Conventions collide.

Two Conventions
The Refugee Convention 1951, formed after WWII, is the basis of UK asylum law. The key protection enshrined in the Refugee Convention is that refugees should not be refouled to their home country. UK and EU law extends that protection to asylum seekers, until their claim is determined. The Hague Convention 1980 is aimed at a wholly different situation in which an abducting parent removes a child from the jurisdiction without the consent of the left-behind parent. The protection afforded in that Convention is that the child will be immediately returned unless an exception applies.

The problem
On its face, the two Conventions can march hand in hand: if a child is a refugee then it would amount to an exception to implementing a return order under the Hague Convention. However, the problem lies in the practicalities. Return orders should be made as soon as possible so the child arrangements can be determined in their home jurisdiction, but asylum claims usually take years to determine. So how to ensure refugees are not refouled without opening the door for spurious asylum claims by abducting parents, designed to delay and ultimately thwart a return order?

Four scenarios
The Court of Appeal identified four scenarios: (i) where a child is granted asylum, (ii) where a child’s asylum application is pending, (iii) where a child’s asylum appeal is pending, and (iv) where the child is a dependant on the parent’s asylum application. The Court of Appeal concluded that there was a bar to implanting a return order in Hague proceedings in scenarios (i) and (ii), there was no bar in scenario (iv), and was not required to decide in scenario (iii). The Supreme Court took a different view.

Mark Smith was part of the team acting on behalf of reunite ICAC in G v G. Reunite ICAC intervened in the appeal, alongside Richard Harrison QC and Jennifer Perrins of 1 King's Bench Walk Chambers and Kim Lehal at Brethertons LLP.

Corporate Crime analysis for Lexis Nexis PSL by Joe O'Leary: R v Forte and another [2020] EWCA Crim 1455.

This case sets out the key principles and procedure to be followed under applications pursuant to section 10A of the Proceeds of Crime Act 2002 (POCA 2002) where the court has to determine the extent of the interest of a third party in property held by a defendant that is likely to be realised or otherwise used to satisfy a confiscation order. The court held that where the prosecution intends to prove that a defendant has a beneficial interest in property and another holds, or may hold, an interest in that property, the burden and standard to be applied are those of the civil standard. Where matrimonial property is concerned, the court is entitled to look to the evidence and draw such inferences as they see fit to determine whether beneficial interest should follow legal title. Such evidence can include sham divorce proceedings and the use of property for a joint purpose.

What are the practical implications of this case?
In the absence of a prescriptive procedural structure, judges determining the interests of third parties pursuant to POCA 2002, s 10A will be careful to ensure that the proceedings are fair and in accordance with Article 6 of the European Convention on Human Rights principles. While this case does not deal with criticisms of such a procedure, it sets out guidelines a court is to follow when considering a third party’s interest under POCA 2002, s 10A—particularly that, in relation to the third party’s case, the procedural rules to apply are those of the civil jurisdiction. This includes a lower standard of proof, and a wider discretion for inferences to be drawn where a party does not give evidence. This is in contrast to the prescribed procedure for inferences under the Criminal Justice and Public Order Act 1994 (CJPOA 1994), (see Practice Note: Inferences from silence— failure to testify.

Gemma Lindfield features in Sara Chariau's latest podcast, providing an insight into Domestic Abuse and the Law relating to such behaviour and abuse within a domestic setting. Gemma provides a comprehensive explanation of this dreadful problem and shares her opinion on the Domestic Abuse Bill currently being debated in parliament. She also provides personal insights from her career at the Bar and advice to aspiring barristers.   

CB v EB [2020] EWFC 72

Mr Justice Mostyn considered whether the Family Court has an almost unfettered discretion under section 31F(6) of the Matrimonial and Family Proceedings Act 1984 (MFPA 1984) to set aside any order of the Family Court where exceptional circumstances justify it. This case concerned an application to set aside a ten-year old final consent financial remedy due to a foreseeable change of circumstances where the facts did not otherwise constitute a Barder event and the order was not capable of being varied or discharged under section 31 of the Matrimonial Causes Act 1973 (MCA 1973).

Maria Scotland, barrister at 5SAH, considers the issues for Lexis Nexis.

What are the practical implications of this case?
Ten years after the High Court approved the parties’ final financial consent order dividing their marital assets equally on divorce, and seven years after a clean break was effected between the parties, the husband applied to vary the final consent orders, to set the terms aside and redistribute the wife’s wealth to achieve equality of assets at the date of the hearing. The husband was a successful property developer during the marriage and at the date of the divorce in 2010 the parties had over £12m. The husband’s case was that ten years after the divorce he was left with ‘just’ £1m, while the wife had about £8.5m, which he argued was unfair. The husband conceded that the facts of the case did not constitute a Barder event (per Barder v Barder (Caluori Intervening) [1987] 2 FLR 480), but argued that the emergence of the unified Family Court (but not the High Court) from the County Court on the 22 April 2014 had conferred on the Family Court a wide discretion to set aside a final financial order where it is just to do so under MFPA 1984, s 31F(6).