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Court of Appeal allows application to vary financial settlement after inheritance

The Court of Appeal has allowed a wife’s application to vary the terms of a financial agreement after the husband received inheritance from his late father.

The recent case of Critchell v Critchell (2015) explores the circumstances in which a former spouse can apply to vary the terms of a financial settlement agreement.

The Facts

Further to the parties’ separation, the wife remained in the former matrimonial home with the parties’ two children and the husband purchased a new property using £85,000 borrowed from his father and £63,000 by way of a mortgage.

The parties agreed a financial settlement by consent, whereby the former matrimonial home would be transferred to the wife, subject to the mortgage (which she would assume responsibility for) and a charge in the husband’s favour, equal to 45% of the net sale proceeds of the property.  Just one month after the parties had entered into the financial Consent Order, the husband’s father passed away, leaving him an inheritance of approximately £180,000. 

The wife sought to appeal the terms of the Consent Order, relying on the principles set out in the case of Barder v Caluori (1987).  The wife asserted that the inheritance received by the husband was a “Barder event”, which invalidated the basis/fundamental assumption upon which the Consent Order had been made. 

At first instance, the Court allowed the appeal and varied the Consent Order.  The Judge found that the Consent Order had originally been based upon the parties’ needs and although the wife’s needs had not changed, the inheritance meant that the Husband no longer required a share in the former matrimonial home. 

The Appeal

The husband’s appeal was heard by the Court of Appeal last week.  The husband asserted, amongst other things, that the purpose of the Consent Order had been to meet the wife’s needs and the fact of his inheritance did not change this.  The husband’s appeal was dismissed. 

The Court of Appeal found that the first instance Judge had not erred in finding that the death of the husband’s father and the subsequent inheritance had invalidated the basis/fundamental assumption upon which the Consent Order had been made.  The key was not that the value of the parties’ assets had increased, but that the needs for which provision had been made had.

The Order was varied to extinguish the husband’s charge over the former matrimonial home.  The former matrimonial would therefore be the wife’s sole property.  This case highlights the circumstances in which a financial agreement may be varied, even where it has been made with the parties’ consent. 

If you require any further information please contact a member of our expert family team.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Beverley Jones

Partner - Head of Family Department (Liverpool)

Heading the family team in Liverpool, I am a family and matrimonial expert who deals with all aspects of family law.