Pension sharing order overturned following death of one of the parties

A pension sharing order was recently overturned after one of the parties died – despite the executors of her estate opposing an application to set it aside. The couple, who married in 1979 and separated in 2017, had come to an amicable agreement about the husband’s pension from Shell, which was split more or less equally between the two parties. Each should have received just over £500,000 and there was a pension sharing order which gave 51% of the husband’s Shell pension to his ex-wife. The pension had a cash equivalent of over £1m at the time.

The pension credit would have been worth around £600,000 to the wife, but in August 2021, she died, and the husband applied for the previous pension sharing order to be set aside. The executors of the will opposed the application.

How was the decision made about the pension sharing order?

The Family Court decided the order had to be set aside, because it had been made as part of a settlement between the husband and his former wife, who was now deceased. The court decided that, since all of the criteria in the case of Barder v Caluori[1987] 2 All ER 440 had been met, the order had to be set aside.

The court had to decide whether or not the death of the applicant’s former wife had ‘invalidated the basis or fundamental assumption upon which the order had been made.’

The husband argued that a pension was intended as a form of income and that after the death of his former wife, it was no longer needed. He also said that if the court had known his wife would die within six months of the order being made, the order would probably not have been made in the first place.

The executors argued that in the light of other recent legal decisions, the pension should not be considered differently to the parties’ other assets and that his deceased wife (or her estate) was still entitled to the pension sharing order.

The court had to decide whether whether:

(i) the new events had occurred within a relatively short time,

(ii) the application to set aside ought to be made reasonably promptly,

(iii) there was no prejudice to third parties and

(iv) whether the death of the wife had invalidated the basis, or fundamental assumption, upon which the order had been made.

• The new events had occurred within a relatively short time – the wife had died barely six months after the order had been approved. The previous case of Barder stated that it was ‘extremely unlikely that the event could be as much as a year after the order and would in most cases be within a few months.’
• The application had been made promptly, within a day of her death.
• The respondents didn’t raise any issues of prejudice to third parties.
• Regarding the question of whether the wife’s death had invalidated the basis, or fundamental assumption, upon which the order had been made, the court first needed to decide on what basis it had been made. The order was by consent so there was no judgment from a court setting out the reasons for it.

The main reason for the pension sharing order had been to make sure that both parties were provided for and had enough income for their retirement. If they had known that the wife would not have lived longer than six months after the order was approved, it wouldn’t have been made. The court decided that it was the intention of the parties at the time of making the agreement that mattered, and not any intention that was decided afterwards.

Since all of the Barder criteria had been met, the court had to set aside the pension sharing order.

For advice on financial agreements or any other aspect of family law, contact Gillbanks Family Law and we’ll be delighted to help.