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Birch V Birch

September 8th, 2017

The Supreme Court have recently reached a decision into a financial agreement following divorce, relating to property.

In the case of Birch v Birch [2017] UKSC53 the husband and wife had entered into a consent order in 2010. Part of the order stated that the husband should transfer to the wife his legal and beneficial interest in the matrimonial home subject to the mortgage, so that the wife could continue to live there with the two children.

The wife gave an undertaking to discharge all the mortgage payments, and indemnify the husband against any liability in relation to the mortgage, and also to use her best endeavours to release him from the mortgage. The order went on to say that if the husband had not been released from his mortgage covenants by September 2012, she would sell the property. The husband therefore had signed up to be a party to the mortgage for at least another two years.

By November 2011 the wife, who had continued to pay her mortgage, issued an application to vary her undertaking, explaining that she had not been able to secure the release of the husband from his mortgage covenants, and that it would not be possible by September 2012. The reason that she gave for her application was that the children’s schools were in the vicinity, and it would be damaging to move. She therefore sought a variation for a seven year extension.

The husband argued that the court had no jurisdiction to hear the wife’s application. Ultimately it went up to the Supreme Court and by a majority of 4-1 the Supreme Court allowed the wife’s appeal.

The reasons for allowing the appeal are a little unusual. The Supreme Court came to the decision that the courts below had wrongly concluded that they did not have jurisdiction to release the wife from her undertaking, and failed to distinguish between the existence of the court’s jurisdiction to release the wife from her undertaking, and the exercise of the court’s jurisdiction. Lord Wilson went on to say that where Parliament has conferred jurisdiction on a court, there is no scope for a court to say part of it does not exist. Section 31(7) Matrimonial Causes Act 1973 is the key piece of legislation in terms of variation.

The Supreme Court held that the court had jurisdiction to vary the undertaking, and therefore sent the case back for consideration in line with the criteria set down in Section 31(7) of the Matrimonial Causes Act. This means that the Judge who hears the case will need to give first consideration to the welfare of the two children, and have regard to all the relevant circumstances of the case, including in particular whether the wife can establish a significant change of circumstances since her undertaking was given and whether, if so, what extent the husband has suffered and is likely to continue to suffer, by remaining liable under his mortgage covenants.

If the court finds that the husband has suffered and/or would be likely to suffer, prejudice as a result of delay in selling the home, the court might favour compensating him, by asking the wife to make provision for him out of the ultimate net proceeds as a condition of release.

One of the Judges hearing the case, Lord Hughes, did not agree because he was of the view that it must be kept in mind that the Section 24(A) Matrimonial Causes Act 1973 order is ancillary to a capital order, and final capital orders cannot be varied in their substance irrespective of whether there is a change in circumstance.

It will be interesting to see what happens when the case is heard in the lower courts, and to whether or not the wife will be successful in her application to vary the undertaking. More widely it does create, in the writer’s view, a bit of uncertainty around final orders. Does this mean that if a wife, for example, can show that there has been significant change and fulfil the criteria laid down in Section 31(7) of the Matrimonial Causes Act, then effectively she re-writes the terms of what is a final order in relation to capital? It would seem that the wife will have a significant hill to climb in order to persuade the court that, having regard to all the circumstances of the case and first consideration being given to the welfare of the children, and the circumstances of the case including any change in any of the matters to which the court is required to have regard when making an order, will be an uphill struggle.

Watch this space …..

 


 

Written by

Jo Hawkins

Jo qualified as a solicitor in 1992 having completed her training at leading Cambridge firms Taylor Vinters and Thompson and Co. After qualification, Jo moved to J Garrard and Allen in Olney where she established the family department. In 1994 Jo was made a Partner at J Garrard and Allen and continued to build and develop the practice. Jo trained as a mediator with Resolution in 1996.

In 2001 Jo decided to set up independently and created a purely family law practice in Stony Stratford recognising that in fact the skills required by family lawyers and the expectations of clients experiencing relationship breakdown and separation were different from those required in other areas of the law.

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  • Talk To One Of Our Legal Experts

    01908 262680

    enquiries@hawkinsfamilylaw.co.uk

    enquiries@hawkinsfamilylaw.co.uk

    Talk To One Of Our Legal Experts

    01908 262680

    enquiries@hawkinsfamilylaw.co.uk

    enquiries@hawkinsfamilylaw.co.uk

    2019 Family: Beds, Bucks, Herts and Middx – South East

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