In the case of Goodyear v Executors of the Estate of Heather Goodyear (deceased) [2022] EWFC 96, the Court considered what should happen to a pension sharing order made in the wife’s favour, where the wife died 6 months after the order was made.
The Facts
Mr and Mrs Goodyear (‘H’ and ‘W’ respectively) married in 1979 and separated in 2017. They had two adult children. In 2019, divorce proceedings were issued, and H applied for a financial remedy.
On 25 January 2021, financial remedy proceedings were settled by consent including a pension sharing order entitling W to 51% of H’s pension which had a cash equivalent value of over £1m. The percentage reached was a compromise following a report by a pension expert who was jointly instructed by both parties.
In late June 2021, W was diagnosed with cancer and on 3 August 2021, W sadly died. H sought for the pension sharing order to be set aside, which was opposed by W’s estate. The parties’ two adult children were the executors of W’s estate and became the respondents in the present case (‘R’).
The Law
The court considered a few legal points in this case, but the key issue was ultimately whether or not W’s death was a Barder event. Based on the case of Barder v Barder, a Barder event is a new event after a financial remedy order has been made which fundamentally invalidates the order made. If something is found to be a Barder event, the court can set aside the order. To do this, the court needs to be satisfied of the following:
- The event invalidates the basis or fundamental assumption upon which the order was made;
- The event occurred within a relatively short time after the order (this will usually be no more than a few months);
- The application should be made promptly; and
- The court’s decision to set aside should not prejudice third parties who have acquired in good faith and for valuable considerations interests in the property which is the subject matter.
The Judgment
The Court found no issue in satisfying criteria two, three and four of the Barder test above. It was the first criterion which required more consideration: what was the fundamental assumption upon which the order was made?
The Court considered that because pension rights can be so flexible, it cannot be automatically assumed that the purpose of the pension sharing order was to provide W with income on retirement (a purpose that is invalidated on her death). To understand the reasons behind the order, the court had to look back to the pension expert’s report and the parties’ subsequent negotiations.
The correspondence showed that H had sought to use a figure of 47.58%, which the pension expert concluded would have given equality of income excluding post separation contributions. W had sought to use a figure of 51.16%, which the pension expert concluded would have given equality of retirement income, regardless of post-separation contributions. The parties agreed to compromise at 51%. Though no explicit rationale was provided for this figure, the Court found that the negotiation seemed to focus on income and therefore satisfied itself that the purpose behind the pension sharing order was to ensure that the parties had sufficient income during retirement. For this reason, the Court found that W’s death was a Barder event and the pension sharing order could be set aside. The next issue was: what alternative order would be appropriate?
On the one hand, H suggested that there should be no pension share at all because its purpose was to meet the income needs of W. If they had unknown W was going to die within 6 months, a pension share would not have been ordered or agreed to. W’s estate, on the other hand, suggested that the pension share should be amended to equalise capital provision as W had earnt an equal share of the pension after a 38-year marriage.
The Court agreed with both parties, saying: ‘Mrs Goodyear had ‘earned’ her share of this particular pension through this long marriage, but it would also have been required to provide for her income needs at least in part’. The Court determined that a pension share would have been a fair outcome, even if they had known W was going to die within 6 months.
The Court set aside the existing pension sharing order and replaced it with a pension sharing order of 25% to W, meaning H would retain 75%. The only explanation for these percentages was that they appropriately ‘reflect the ‘earned’ share whilst providing a ‘discount’ for the many years over which income will not be required for Mrs Goodyear’. Unfortunately for us, it is not clear how this specific percentage was arrived at as it does not appear in the expert’s report or anywhere else in the judgment.
This case is an illustration of the importance of understanding why an order is made as it can become fundamental to later arguments for variation. It also demonstrates the flexibility of the court to consider and respond to Barder events when they arise.