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The Barder principle and its uses

The case WA v Executors of the Estate of HA & Others EWHC 223 (Fam) is certainly unusual. It involves a wife’s appeal against a consent order for financial provision, on the basis that the husband’s suicide (just 22 days after making the order) constituted a Barder event.

 

The Barder principle comes from the 1987 case of Barder v Barder, and allows a court to exercise its discretion to grant leave to appeal out of time, if certain conditions are satisfied.

The facts of Barder itself demonstrate the highly limited circumstances in which the principle will be applied. In the Barder case the wife killed the children and committed suicide five weeks after the consent order had been made. The House of Lords held that it was entirely appropriate to appeal out of time given that the basis upon which the order had been made was totally invalidated.

Lord Brandon set down four principles, which must be satisfied for Barder to apply:

  1. New events have occurred since the making of the order, which invalidate the basis, or fundamental assumption, upon which the order was made, so that, if leave to appeal out of time were to be given, the appeal would be certain, or very likely, to succeed.
  1. The new events should have occurred within a relatively short time of the order having been made. In most cases this would be no more than a few months.
  1. The application for leave to appeal out of time should be made reasonably promptly in the circumstances of the case.
  1. The grant of leave to appeal out of time should not prejudice third parties who have acquired, in good faith and for valuable consideration, interests in property which is the subject matter of the relevant order.

The category of post-order events which will qualify as Barder events is therefore limited to the most extreme or unlikely of subsequent events. In Richardson v Richardson EWCA 79, Lord Justice Thorpe stated:

Cases in which a Barder event, as opposed to a vitiating factor, can be successfully argued are extremely rare, and should be regarded by the specialist profession as exceedingly rare, and should not be thought to be extendable by ingenuity or the lowering of the judicially created bar.

Background to the case

The wife was an heiress who was described by Moor J as being "fabulously wealthy”. The wife had approximately £413 million in assets (mostly in untouchable trusts) and the husband £2 million. Prior to the marriage, in 1997, the parties entered into a prenuptial agreement – essentially a property separation agreement – and throughout the marriage finances were kept very separate. The parties and their three minor children lived on a very large estate worth £30 million. The property was purchased during the marriage in a dilapidated state and renovated to a very high standard during the marriage. Neither party ever undertook any remunerated employment during the marriage – the wife earned £1.8 million income alone from her trust assets.

The marriage broke down in 2014 and the husband took the breakdown very badly. Following separation, the parties successfully negotiated a financial settlement at FDR where the wife would pay the husband £17.34 million in full and final settlement. The prenuptial agreement did not figure significantly in the negotiations. The consent order provided that the lump sum would be paid in two tranches of £8.67 million, the first to be paid within 14 days, and the second within 14 days of the mother-in-law vacating a cottage on the family estate. The first tranche was paid on time and the husband transferred money to enable his mother to be rehoused. The second tranche was never paid, initially by agreement, and then by a stay imposed by Moor J, as a result of the husband committing suicide.

The husband’s will left his entire estate to his three adult brothers (it was a sore point in the appeal that it was not left to the children). Moor J described this as the “elephant in the room” and believed this to be what led to the litigation.

The appeal

The wife’s notice of appeal relied on Barder, arguing that the fundamental basis of the consent order was that the lump sum was required by H to meet his needs, and that basis had been invalidated by his death. The wife sought the entirety of the order to be set aside and for money already paid to be repaid.

Put simply, W did not want to pay the second tranche and wanted every penny already paid returned to her on the basis that the husband, as a result of his death, no longer had any needs.

Respective Arguments

The executors argued that the husband’s death was not foreseen by the wife, but it was not unforeseeable. They argued that the order was not a needs order and was, in essence, a sharing order in general and with the FMH in particular – that he had earned his share and in any event the court should exercise its discretion to uphold the order.

The wife argued that the husband’s death was definitely not foreseeable; that his mental health had been investigated by professionals and, that in due course, he had been given a clean bill of health. She argued that she would never have agreed to pay him such a large sum if she had known of his intentions. The award was a needs-based award and sharing played no part in negotiations or computation of the award. Had the court known the full facts when it made the order, it would have proceeded on the basis of what the husband’s needs were for the next 22 days only –  the wife was therefore saying that no award should have been made at all.

Judgment

In his judgment, Moor J provided a short resume of the principles derived from different authorities relating to the three specific areas relevant to this appeal:

  1. The Barder group of authorities
  2. Authorities relating to the approach of the court Miller/McFarlane
  3. Radmacher v Granatino .

Having reviewed the authorities, Moor J asked himself the following questions:

  1. Was the H’s death foreseeable?
  2. If not, was his award a sharing award or a needs-based award?
  3. If it was a needs-based award, what award was now appropriate?

Was the H’s death foreseeable?

Moor J considered a great deal of evidence in respect of H’s mental health, as follows:

  • The eldest child disclosed concerns about contact with her father, saying she was “uncomfortable in his presence”. No allegations of abuse were made by the husband but he was arrested and detained in cells overnight. This distressed him immensely and led to him seeing professional medical advice.
  • The husband’s consultant psychiatrist was very concerned about him and felt, in August 2014, that there was a risk of suicide or other desperate behaviour.
  • The police removed his gun licence.
  • There were injunction proceedings where the wife briefly employed security guards at the FMH (former matrimonial home).
  • A letter from the husband to the wife saying he would never harm himself, knowing what it would do to the children.
  • A Single Joint Expert was appointed to assess the husband’s mental health, posthumously. The psychiatrist concluded that the husband had regained his composure, that there was no longer a serious risk to others and that he was not mentally ill.

Moor J came to the conclusion that the husband’s suicide was not foreseeable. He remarked that "if it had really been foreseeable…the wife or her advisors would have come to that conclusion and contact would have stopped, whether by professionals or by the court”. The fact that she willingly paid him over £17 million is also relevant. If there was material that should have led her to realise that his death was foreseeable, she would not have agreed to this award being made and her advisors would not have let her. If not, was his award a sharing award or a needs-based award? Moor J was satisfied that H’s claim was primarily needs-based. During negotiations there had been no claim by the husband’s lawyers to a sharing entitlement and, in any event, it would have undoubtedly have been less than £17 million, since most of the wife’s assets were non-matrimonial (the untouchable trusts). The husband’s solicitor told DDJ Coleman during proceedings that the husband was getting a payment “which enabled him to buy himself a nice property and keep himself, and will have no financial anxieties”. Moor J saw this as a clear reference to it being a needs-based award. While there was no exchange of budgets or property particulars, equally there was no claim by the husband’s lawyers for a sharing entitlement. In particular there was no valuation of the FMH. Given the nature of the assets involved, a needs-based award, generously assessed, was the correct way to proceed. The wife’s advisors could have referred to the prenuptial agreement as being clearly designed to exclude sharing, but they did not. On being decided as a needs-based award, the order was therefore susceptible to being set aside pursuant to the Barder jurisdiction. The fundamental assumption underlying the order was the husband’s housing and income needs in the long term. This assumption was totally invalidated by his death within one month of the order being made. If it was a needs-based award, what award was now appropriate?

Moor J asked himself, 'If I had been sitting in court in November 2014, knowing that the H would die in less than a month, what would my award have been?'

He held that a nil award would have been wrong.

Moor J concluded that it would not be right to award the husband a full equal share on FMH given the fact that all the finance came from the wife. The wife disclosed net value of estate in her sole name to be £14.9 million. Moor J held that 1/3 share of W’s net share in the FMH would have been appropriate = £5 million. He further held that the pre-nuptial agreement would not have prevented this as it had clearly been ignored during negotiations and parties cannot pick and choose effectiveness of pre-nup. Moor J commented that the prenup was agreed long before Radmacher and that he had given very limited thought to it at all.

Moor J rejected the argument that H had no needs. W and H had taken on responsibility for the mother-in-law and she needed to be rehoused. He held that it was not reasonable for that to be funded from H’s assets alone. Other brothers were available to take responsibility for their mother, but it had been agreed between them that this brother and his W were to be responsible and Moor J held that this should not be affected.

Conclusion

Moor J allowed the appeal and reduced the lump sum from £17.34 million to £5 million. The executors of the husband’s estate were therefore required to pay the wife £3.6 million.

The judgment can be read in full here.

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