UK Supreme Court Blog

EDITORS: Dan Tench, Emma Cross, Zainab Hodgson, Francesca Knight, James Warshaw and Natalie Haefner (CMS)
Hugh Tomlinson KC, Matthew Ryder KC, Dévante Gravesande-Smith and Rebecca Khan (Matrix)

This case concerns whether a financial order agreed as part of a divorce settlement regarding property can be varied under the Matrimonial Causes Act 1973, s 24 on the basis that the financial order essentially created an order for sale. If the financial order stands then the wife must sell the property before 30 Sep 2012. If the order can be varied under the Act then she is requesting that it is varied to the effect that the property will be sold in default when the youngest child attains the age of 18, or either of the two children completed full time education.

The wife’s application was dismissed at first instance and in the Court of Appeal on the ratio that both courts lacked jurisdiction.

Background

On 14 Oct 2010, the parties finalised their divorce agreement. One aspect of this was a financial order to the effect that the husband had no legal or beneficial interest in the matrimonial home and the wife agreed to release the husband from any liability or provide an indemnity and to discharge all the mortgage payments or, if not possible by 30 Sep 2012, to sell the property. Once completed, the husband and wife could not make claims for financial provision, pension sharing and property adjustment orders to each other.

The wife wished to change the financial order so the deadline is moved from 30 Sep 2012 to when her youngest child turns 18 or either child completes full time education. She argues that this is in the best interests of the children relying upon Matrimonial Causes Act 1973, s 31(4). This section states that “In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, first consideration being given to the welfare which a minor of any child of the family who has not attained the age of eighteen…”

The appeal has previously been dismissed on the grounds that the court does not have jurisdiction to change the financial order.

Arguments before the Court of Appeal

Permission to appeal purely the issue of jurisdiction to the Court of Appeal was granted.

The wife argued that the Financial Order she agreed to as part of the original divorce settlement was in reality an order for sale under s 24A of the Act and thus section 21(1) and (2)(f) applied without qualification. Under these provisions, the court has power to order a variation and in doing so would have to give “first consideration” to the welfare of the minor child (s 31(7)). The lower courts relied on the case of Omielan v Omielan in their decisions on jurisdiction but the wife argued that her case could be distinguished from Omielan because in that case the variation would have had an impact on the beneficial interests upon the children and would have seen the interests of the former spouses reduced. Whereas, in this case the variation would have no effect upon the beneficial interest.

The husband argued the original Financial Order was designed as a final settlement of the parties’ financial claims and the transfer order and the undertakings agreed to were ‘part and parcel’ of the whole financial order. The variation would entirely change the whole financial order which was supposed to offer finality. This would not only be ‘revisiting the territory’ (Thorpe LJ in Omielan) but would strike at the very core of the primary order.

Judgment in the Court of Appeal:

Lord Justice McCombe gave the lead judgment dismissed the appeal. Finality in these proceedings is important and a subsequent court cannot rescind on orders that were made in a broader context of agreements. The only basis upon which the wife might make her application was if the amendment aided the original primary order but this was not the case and, in fact, her application would undermine the original order. If one were, at the drop of a hat, able to change a legal order then what would be the point of issuing one in the first place.

The only circumstances in which it would be acceptable to change a legal order would be if one of the following situations occured:

• fraud or mistake;
• material non-disclosure;
• if there has been a new event since the making of the order which invalidates the basis, or fundamental assumption, upon which the order was made;
• if and insofar as the order contains undertakings; if the items of the order remain executory.

It was not submitted that any of these circumstances applies.

It appears that the original order gave some flexibility to allow the wife to explore the possibility of sole ownership and perhaps an extension of the 30 Sep 2012 deadline might have been considered but a total departure from the order would be an entirely different matter.

Lord Justice Kitchin – Agreed with the lead judgment.

Lord Justice Gross – Agreed with the lead judgment. Comments that para 4.4 may well have been an order under s 24. Concludes that finality is very important in such cases, especially in situations like this where the case has been ongoing since Nov 2012.

The issues before the Supreme Court:

In varying a consent order, does the Matrimonial Causes Act 1973, s 31 apply or was the Court of Appeal to apply a narrower approach – even if this is not in the best interests of the children?