‘Best Endeavours’ : A term commonly found in commercial contracts, that places upon the party given such an undertaking, the obligation to use all efforts necessary to fulfil it. “Best endeavours” places a party under a stricter obligation than “reasonable endeavours.” Investopedia
In these straitened times, couples going through divorce or separation are finding it difficult to free themselves from the shackles of a joint mortgage. When dealing with the transfer of a property in this situation, the best one can hope for normally Is that the remaining owner will use their ‘best endeavours’ to obtain the release of the other parry from the mortgage. But in practice what does that mean, and is it achievable or enforceable?
The received wisdom on this area provides for a party to give an undertaking -= that is to say a formal promise to the court. if breached then the court has the power to send the offending party to prison for contempt of court. but will it – especially if that party is the parent with care of young children, and/or the main breadwinner in that household.
The usual clause for ‘best endeavours’ undertakings goes like this:
‘Undertaking to pay mortgage and outgoings on property’
The [applicant]/[respondent] shall make the following payments pending [the financial dispute resolution appointment]/[the final determination of these proceedings]:- [insert – for example all interest and capital repayments due in respect of the mortgage secured against the family home; and all [reasonable] sums due in respect of service charge, council tax, utilities (including but not limited to gas, electricity, water and telephone accounts), and buildings and contents insurance premiums in respect of the family home].
Drafting an Order
Is there a way to improve the position when drafting an order?
The well regarded, and widely adopted precedents provided by Resolution have provision for using best endeavours within the preamble section of any order, but are still expressed as undertakings. The wording they recommend is:
[The applicant]/[The respondent] undertakes to [use [his]/[her] best endeavours to] procure the release of [the respondent]/[the applicant] from any liability under the mortgage secured upon [address] in favour of [bank etc]:
(a) [on or before completion of the transfer provided for by paragraph [ ]]/[within [ ] days from the date of this order]; and
(b) in any event to indemnify [the respondent]/[the applicant] against all such liability.
Resolution’s precedents helpfully add further provisions and definitions for ‘Best endeavours and set them out as follows:
[obtaining the mortgage with a different provider]
[finding a guarantor]
[partial reduction of the mortgage]
[discharge of arrears]
[remortgage at a higher percentage rate if necessary].
[The applicant]/[The respondent] will provide the [the respondent]/[the applicant]with reasonable updating information from time to time and upon request as regards [his]/[her] steps made in pursuing such release and the progress being made.
Ultimately, it is the mortgagee that holds final sway over whether one party will be released from their liability under the mortgage. But if expressed as an undertaking, then the courts powers for enforcement when a breach occurs are limited.
CH v WH  EWHC 2379
However, in the recent case of CH v WH  EWHC 2379, Mostyn J was asked to determine whether the court’s inherent jurisdiction extends to making an order that a party uses their best endeavours and not simply an undertaking.
In a Judgment (provided below in full) Mostyn J recalls the standard form of financial order approved and adopted by the Financial Remedies Working Group in its first report of 31 July 2014. In this case however, the judges at first and second instance in Southampton were not willing to and nor did they seem to recognise that the Court’s powers do include the power to order a party to use their best endeavours.
In Mostyn J’s judgment, the Matrimonial Causes Act 1973 under section 30 ‘gives the court power when making a property adjustment order to direct that the matter be referred to one of the conveyancing counsel of the court for him to settle a proper instrument to be executed by all necessary parties. While this provision is now virtually obsolete it cannot be disputed that the instrument in question could contain terms which furnish all necessary indemnities and the obligations to pay instalments in relation to a mortgage secured on the property’
Financial Remedies Working Group
Therefore, following the Financial Remedies Working Group draft orders, the following clause should perhaps be the one adopted in situations such as this – which are increasingly common in practice – and perhaps not by way of an undertaking:
Procure release from mortgage and to indemnify
The [applicant]/[respondent] shall use [his]/[her] best endeavours to procure the release of the [respondent]/[applicant] from any liability under the mortgage [as in definition above] [by [insert date]]/[on or before completion of the transfer provided for by paragraph [insert] / [within [insert] days of the date of this order], and shall in any event indemnify the [applicant]/[respondent] against all such liability.
The full judgment in CH v WH  EWHC 2379 is repeated below (it is relatively short!)
Mr Justice Mostyn:
- As long ago as 13 February 2017 a draft final consent order concluding the financial remedy proceedings between the parties was submitted to the Family Court at Southampton. But the order has not been made. Deputy District Judge Underhill has twice refused to approve it, which refusal has been upheld and confirmed by District Judge Sparrow, on the ground that certain of its provisions are outside the power of the court to order.
- The matter has been referred to me by the wife’s solicitors. I have allocated the proceedings within the Family Court to High Court judge level pursuant to rules 14 and 15(2) of the Family Court (Composition and Distribution of Business) Rules 2014 (S.I. 2014 No. 840) and have approved the order as I am perfectly satisfied that the objectionable terms are fully within the power of the court to order.
- At paragraphs 15 and 16, the draft order provided for two jointly owned properties to be transferred respectively to the wife and the husband. These properties were mortgaged. The draft order provided that each party must use his or her best endeavours to procure the release of the other party from the mortgage on the property that he or she received and, in any event, must indemnify that other party against liability thereunder. Deputy District Judge Underhill was of the view that this order was not within the power of the court to make. On 13 April 2017, he stated: “paragraphs 15 and 16 need to be recitals, the court cannot order pursuant to the Matrimonial Causes Act”. On 6 July, 2017 he stated: “the Mostyn precedents do not overrule the requirements and parameters of the Matrimonial Causes Act. The court can only make an order that complies with the Matrimonial Causes Act.” On 28 July 2017 an officer writing on behalf of District Judge Sparrow stated: “District Judge Sparrow has upheld Deputy District Judge Underhill’s previous 2 decisions, in that there is no power set out in the Marital (sic) Causes Act 1973 to order someone to use best endeavours to procure release from a mortgage”.
- The draft order also went on to provide that the wife would resign as a director of a company and would transfer her shares in it to the husband. It provided that she had no claim against the company and that the husband would indemnify her in respect of any liabilities in that regard. Deputy District Judge Underhill was of the view that this order also was outwith the power of the court, but that objection appears to have fallen away upon the matter being reconsidered by District Judge Sparrow.
- The order in respect of the mortgages derives from the standard form of financial order approved and adopted by the Financial Remedies Working Group in its first report of 31 July 2014. At para 84 of that report it was stated:
‘A number of those responding to the consultation process queried whether, in relation to mortgage payments and other household outgoings, the court had power to direct one party to make such payments and/or indemnify the other against non-payment. Such obligations have traditionally been included as undertakings, but their inclusion as directions in the draft standard orders implied that the court had such powers when undertakings were not offered. Mostyn J has expressed the following view in justification of this inclusion:-
“Under the new s31E(1)(a) MFPA 1984 in any proceedings in the family court, the court may make any order which could be made by the High Court if the proceedings were in the High Court. The High Court has power to order or decree an indemnity. This is an equitable remedy originally vested in the Court of Chancery which was subsumed into the High Court by the Supreme Court of Judicature Act 1873. It was the very relief initially ordered in Salomon v A Salomon and Co Ltd  AC 22 (but which was later set aside by the House of Lords as offending the rule about the separate legal personality of companies). As to mortgage and other outgoings in my view the power to order A to make payment to B plainly includes the power to order A to make payments on behalf of B. The greater includes the lesser. It was necessary to spell out the power to order the payment of mortgage and other outgoings in Part IV FLA 1996 proceedings (see s40(1)(a)) because the wider direct power does not exist in those proceedings. It would be anomalous if the power to order payment of outgoings only existed in Part 4 but not FR proceedings. It is necessary in my view for the court to have these powers if only to cover the position if someone is not prepared to give the necessary undertakings or is not participating in the proceedings.”‘
6. Following the receipt of comments pursuant to further consultation the Group in its final report dated 15 December 2014 specifically reiterated and maintained its recommendation.
7. Since that time, to my knowledge, over the last three years the orders in questions have been made routinely until this problem has arisen in Southampton.
8. It is elementary that the court cannot make orders outside its powers: see Livesey v Jenkins  AC 424 at 444G, where Lord Brandon stated that there was nothing in section 23 or 24 of the Matrimonial Causes Act 1973 which directly empowered the court to make the order requiring the wife, following the transfer of the matrimonial home to her by the husband, to be solely responsible for the mortgage and all other outgoings on it. Such a provision, he said, should have been incorporated in undertakings. It is certainly true that the literal words of section 23 and section 24 do not provide for the court to be able to make consequential or supplementary provisions of this nature, in contrast to the terms of section 24A(2), which explicitly grants such a power when making an order for the sale of property. However, section 30 gives the court power when making a property adjustment order to direct that the matter be referred to one of the conveyancing counsel of the court for him to settle a proper instrument to be executed by all necessary parties. While this provision is now virtually obsolete it cannot be disputed that the instrument in question could contain terms which furnish all necessary indemnities and the obligations to pay instalments in relation to a mortgage secured on the property. So I do not agree that the provision in question is outside the “parameters” of the Matrimonial Causes Act.
9. But that is not my main reason for disagreeing with the approach taken by the district judges in Southampton. My main reason is set out in the report of the Financial Remedies Working Group, set out above, with which, unsurprisingly, I agree. The basic mistake made by the judges in Southampton is to assume that their powers are confined to the four corners of the Matrimonial Causes Act. The Family Court has all the powers of the High Court. The High Court unquestionably has the power, as part of its equitable jurisdiction, to order an indemnity. If awarded, that represents a legal right in favour of the person so indemnified. The court can award an injunction in support of a legal right. To order someone who has been ordered to indemnify the other party in respect of a mortgage to use his or her best endeavours to keep up the payments on that mortgage is of the nature of an injunction in support of a legal right. In my opinion, this provision is squarely within the power of the High Court to order, and is therefore within the power of the Family Court.
10. In my judgment, these sterile, technical objections to orders in these terms must cease. They have caused needless delay and have no doubt increased costs and caused other inconvenience.
11. That concludes this judgment, which the President has seen and which he approves.
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