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As inflation in the UK hits a 40 year high of 9%, there are few who have not felt the impact on their family budgets and standard of living. The Consumer Price Index is expected to continue rising to above 10% by October 2022, resulting in a further squeeze on household budgets. For those who have had a recent divorce, it may lead them to wonder whether they can re-open the financial settlement to make greater allowance for this unexpected increase in the cost of living.
This is a very common concern, particularly now when finances are being stretched for all sorts of reasons that could not have been predicted a few years ago. It is important to be aware though, that certainty of settlement is such an important principle in law that the Court is required by statute to consider if a ‘Clean Break’ is achievable in all cases and the routes to appeal are narrow and reserved for cases where there has been a significant mistake, material non-disclosure of assets or an event occurring which is ‘both unforeseen and unforeseeable’ and undermines the basis of the settlement.
This final option might initially seem helpful, as indeed, an increase in inflation aggravated by events such as a global pandemic and the Russian invasion of Ukraine could not have been foreseen. However, the case that established this principle was quite different. In the tragic case of Barder v Barder  AC20, the family home was transferred to Mrs Barder so that she could live there with the children. Just weeks later, she killed both children and took her own life. This was decided to be unforeseeable, and the Court set aside the financial order so that Mr Barder would benefit.
It is notoriously difficult to succeed with what is now known as a Barder application. A useful comparison to the current circumstances is the financial crash that took place in 2008. This prompted a series of applications to set aside the previous financial order, none of which were successful, (see for example, Myerson v Myerson (No 2)  EWCA Civ 282). The crash was deemed to be a natural and therefore foreseeable fluctuation, however dramatic. The Covid-19 crisis, war in Ukraine and associated inflation hikes are likely to affect household finances in a much more significant way than the 2008 financial crisis but arguably they could be foreseeable in the same way. Establishing a Barder event is fact specific, and it would need to be an exceptional set of facts for a particular family to have a chance of success. I would be extremely doubtful that increased inflation alone, however unforeseen, would be deemed unforeseeable and, therefore, a reason to revisit a final financial settlement.
If there are minor children, the Child Maintenance Service decides how much maintenance should be paid for them and this can be reviewed regularly during their childhood. The level of payment however is calculated using a rudimentary calculation based on the payer’s income. It does not consider any change in the costs of outgoings.
There is, however, a potential route to vary current financial orders that are in place. If there is an ongoing maintenance order, so that regular monthly payments are made, the recipient’s income claims are still open. Most maintenance orders will include an annual review which might be linked to the RPI or CPI index, so it is important to look at the wording of the original order. If there is no such provision included, the first step is to open a discussion to see whether there can be a variation to the payments made by agreement. If an agreement cannot be reached directly or conversations are difficult, family mediation or arbitration on this specific issue are good options to consider.
If all else fails, it is possible to apply to the Court for a variation in the level of maintenance payments. This would trigger a full disclosure of financial circumstances so that an assessment could be made as to the affordability for the payer of an increase versus the needs of the recipient before a decision would be made. Before an application is filed it is always important to consider the likelihood of success and a receiving party would be wise to consider whether there is an alternative way to increase their income from their own sources, as well as the affordability of an increase for the payer. Could they have paid more but you agreed a lower amount? Have earnings increased? Have outgoings decreased – perhaps due to living with a new partner? If it is affordable for them and essential for you, the payments should rise.
If there is an ongoing maintenance order in place it is certainly worth revisiting to see if a variation is appropriate. Otherwise, there is very limited scope to alter payment of lump sums or transfer of assets and if you do think you have one of the rare cases where a Barder event might apply, you must act fast. For an application to have a chance of success, it must be issued within months of the original divorce order.
Alice Scambler is a Consultant Family Law Solicitor and Mediator, based in Kent. To discuss your own individual situation with Alice, please contact us.