Today, The Supreme Court[1] has decided whether (in the context of varying a consent order) the court should apply s.31 of the Matrimonial Causes Act 1973, or whether it is constrained by Court of Appeal authority to apply a narrower approach, even if that is inconsistent with the children’s interests?
Issue
When varying a consent order, should the court apply s.31 of the Matrimonial Causes Act 1973, or is it constrained by Court of Appeal authority to apply a narrower approach[2], even if that is inconsistent with the children’s interests?
Facts
The financial remedy proceedings in a husband and wife’s divorce were concluded by a consent order in July 2010, which noted the husband’s agreement that he had no interest in the former matrimonial home. The wife provided an undertaking at paragraph 4.4 to secure the release of the husband from the mortgage on the former matrimonial home by 30 September 2012, or for the property to be sold in default.
In November 2011, the wife applied to vary the undertaking in paragraph 4.4 so that the husband would be released from the mortgage or the property sold in default when their youngest child attained the age of 18, or either of their two children completed full time education. She applied under s.31 of the Matrimonial Causes Act 1973, on the footing that the undertaking was equivalent to an order for sale under s.24A. This would require the court to take into account the children’s best interests. The District Judge dismissed the application, and the wife’s appeal was dismissed. The Court of Appeal dismissed the wife’s further appeal, holding the jurisdiction to vary the order was derived from the inherent jurisdiction of the court, rather than s.31 of the Act, and that it was not appropriate to exercise it in this case. The wife appeals to the Supreme Court.
The Judgement
The Supreme Court by a majority of 4 to 1 allows the wife’s appeal and holds that jurisdiction exists to hear the wife’s application. Lord Wilson gives the lead majority judgment, with which Lady Hale, Lord Kerr and Lord Carnwath agree. Lord Hughes gives a dissenting judgment.
The description of the application as being to “vary” the wife’s undertaking is confused. The court’s power is only to grant or refuse an application for release from the undertaking. Although the court’s exercise of its power may result in something which looks like a variation of an undertaking, if it decides to accept a further undertaking, it is the product of a different process of reasoning (see paragraph [5]).
The courts below wrongly concluded that they did not have jurisdiction to release the wife from her undertaking. They failed to distinguish between the existence of the court’s jurisdiction to release the wife from her undertaking, and the exercise of its jurisdiction (see paragraph [6]). The case law indicates that there is full jurisdiction to hear the wife’s application (see paragraph [12]).
Further, in circumstances where the undertaking in para 4.4 could have been framed as an order for sale of the property under section 24A of the Act, variable under section 31(2)(f), it would be illogical for the existence and exercise of jurisdiction to grant release from the undertaking to differ from those in relation to the variation of any such order (see paragraph [17-18] ). The equivalence of the wife’s para 4.4 undertaking with a section 24A order for sale seems clearly to confirm the existence of the court’s jurisdiction to hear her application for release from it ( see paragraph [19]). Lord Wilson is unable to subscribe to the Court of Appeal’s determination of the appeal in Omielan by reference to the non-existence of jurisdiction rather than a refusal to exercise its jurisdiction. Where Parliament has conferred jurisdiction on a court, there is no scope for a court to say part of it does not exist. The terms of a financial order are often interlinked and therefore it is difficult to apply the concept of different territories to such an order. The demarcation of territories within the order is no proper criterion for identifying the existence of a jurisdiction (see paragraph [27]).
Parliament did not in section 31(7) or elsewhere in the Act make a change of circumstances a condition for the exercise of jurisdiction to vary a section 24A(1) order for sale. However, unless there has been a significant change of circumstances since the order was made, grounds for variation of it under section 31 seem hard to conceive (see paragraph ([15]).
The court remits to HHJ Waller the inquiry into whether the court’s jurisdiction to vary the undertaking should be exercised. In light of the equivalence of the wife’s undertaking with a section 24A order for sale, his inquiry will be conducted in accordance with section 31(7) of the Act. He will give first consideration to the welfare of the two children; but it is a consideration which may be outweighed by other factors. He will have regard to all relevant circumstances including in particular, whether the wife can establish a significant change of circumstances since her undertaking was given and whether, and if so to what extent, the husband has suffered, and is likely to continue to suffer, prejudice by remaining liable under his mortgage covenants (see paragraph [29]). 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 (see paragraph [30]).
Dissenting Judgment of Lord Hughes
Lord Hughes gives a dissenting judgment, not on the existence of the jurisdiction to vary a section 24A order for sale, or its equivalent achieved via an undertaking, but on the principles for its exercise. It must be kept in mind that the section 24A order is ancillary to a capital order and that final capital orders cannot be varied in their substance (whether or not there is a change of circumstances). Lord Hughes states that the acid test should be whether the application is in substance (impermissibly) to vary or alter the final order or whether it is (permissibly) to support it by working out how it should be carried into effect (see paragraph [54]). The application in the present case is one which attempts to vary, not to carry into effect, the originally agreed and court-endorsed order and therefore the Court of Appeal was right to hold that it was bound to fail (see paragraph [57]).
Lord Hughes would dismiss the appeal (see paragraph [58]).
[1] Case Ref.: UKSC 2015/0230 and the hearing from 22nd May 2017 can be watched on (1) Morning session and (2) Afternoon session
[2] See: [2015] EWCA Civ 833
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