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England and Wales court rules that inheritance invalidates 'needs-based' foundation in financial provision settlement

Monday, 11 May, 2015

STEP Lead

A man has lost his share in his former matrimonial home because he received a GBP180,000 legacy from his father's estate just after he separated.

Anthony and Charlotte Critchell, separated in 2001 after a nine-year marriage that produced two children. Mr Critchell is a self-employed painter and decorator on a low income, and pays child maintenance. Following the separation Anthony Critchell bought a house using a GBP85,000 loan from his father and a GBP63,000 mortgage.

The only significant matrimonial asset was the family home, with net equity of about GBP175,000. Thus the agreed consent order on divorce was based on the needs principle rather than equal shares. The family home was to be transferred to Mrs Critchell, while granting her Mr Critchell a 45 per cent share of the net proceeds when it was ultimately sold.

Within a month of the consent order, Mr Critchell's father died unexpectedly, leaving him GBP180,000.

Six months later Mrs Critchell applied for a variation of the consent order to take this legacy into account.

She claimed it represented an event that 'invalidated the basis or fundamental assumption upon which the consent order had been made' – a so-called Barder event, named after the case of Barder v Barder (1987 2 FLR 480) in which the principles for varying consent orders were first established.

The England and Wales High Court accepted this claim. Judge Wright considered that the husband's inheritance meant that he no longer needed his share in the former matrimonial home. She thus varied the settlement by extinguishing Mr Critchell's charge over the former matrimonial home, thereby making it the wife's sole property.

Mr Critchell appealed, arguing that the husband's inheritance did not change the family's assets and needs so as to invalidate the basis of the consent order. The object of the order was to meet the needs of the wife; it had, he said, achieved that goal and that had not changed as a result of the husband's inheritance. He claimed that Judge Wright had erred by substituting her own view of what was a fair order and overruling the order made by the district judge. Moreover, he argued, case law suggested that 'Barder events' overturning a consent order should be regarded by the judiciary as 'exceedingly rare'.

Against this, Mrs Critchell argued that if the reality of the father's imminent death had been known at the time of the original consent order, the court would have taken the inheritance into account as 'other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future', as set out in s25 of the Matrimonial Causes Act 1973.

The England and Wales Court of Appeal (EWCA) agreed with Mrs Critchell's view. 'Need is a relative concept which is affected by how much there is to go round', commented Lady Justice Black in her judgment. 'If more resources are available, needs can be provided for more fully or less precariously.'

The EWCA upheld Wright J's ruling that the settlement should be substantially varied in Mrs Critchell's favour by awarding her sole ownership of the former matrimonial home (Critchell v Critchell, 2015 EWCA Civ 436).

Sources