Insufficient evidence to support an application to vary a final order in financial remedy proceedings on the basis that the economic impact of COVID -19 constituted a Barder event.
In March 2020 Cohen J handed down judgment in longstanding financial remedy proceedings commenced in June 2017 and involving 2 very wealthy families (FRB v DCA (No. 2)  EWHC 754 (Fam)). The final order included provision for the Husband (H) to pay the wife (W) £64 million, comprising the matrimonial home mortgage free (worth £15 m and requiring H to redeem the mortgage of £12m), and a lump sum of £49 m in 2 instalments - £30 m in 6 months and £19 m in 18 months of the order, those time periods being volunteered by H. In the event of late payment interest would be payable at 4 %. Periodical payments were at the rate of £720k pa to be reduced pro-rata by the proportion of the £49m that had been paid. The Court of Appeal refused H's application for permission to appeal.
Since the order was made, H had not paid any of the £64m. He applied to vary the quantum and timing of the lump sum on the basis that the pandemic was a Barder event and his assets (including interests in hotel, airline, and care home businesses) were affected by the economic consequences of the Covid-19 pandemic such that he was unable to make payment due to "the enormous reduction in my financial worth"
The wife (W) applied for an increase in her periodic payments to £2.5 m, interest on all outstanding sums at an increased rate of 8% and a legal services provision order in the sum of £1.4 m. Cohen J refused H's application on the basis that there was no documentation available to evidence that his wealth had significantly reduced and it was not appropriate to consider the general financial situation of the economy. The Judge noted that a "striking feature" of H's evidence was the paucity of any specific information relating to the impact of the macro-economic situation on the assets the Court had found to be part of the marital acquest. H's application had been put on the basis that he was unable to quantify the "enormous reduction" and therefore the Court should embark on a complete revaluation of all the assets – an exercise that would cost some £300-400k and take 6 months to complete. Cohen J also stressed that H's application should be viewed in the longer term, with the stock market indices improving and a return to the pre-pandemic position expected in a matter of years. It was also noted that in his judgment in March 2020, the Judge had questioned liquidity and raised the possibility of there being a transfer of assets between the parties so that H had the option of converting some of the award he had to pay from cash into shares. H had chosen not to pursue that option.
Read the full summary on Family Law Week.