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Family Section

CH v WH [2017] EWHC 2379 (Fam)

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To order X who has been ordered to indemnify Y in respect of a mortgage to use their best endeavours to keep up mortgage payments is a provision within the power of the H Ct to order, and therefore the Fam Court.

A draft consent order setting out the final agreement between the parties had been sent to the Family Court. Twice the consent order had been sent back, the judge having refused to approve it because it contained provisions the court had no power to order. 

The draft order provided for two jointly owned properties to be transferred one to the wife (’W’) in her sole name and one to the husband (’H’) in his sole name. Both properties were mortgaged and the draft order provided that each had to use their best endeavours to procure the release of the other from the mortgage and indemnify the other against any liabilities. The deputy district judge and district judge dealing with the case both agreed that there was no power in the MCA 1973 to order someone to use best endeavours to procure release from a mortgage. 

W’s solicitors brought the issue before Mostyn J. 

Held

Referring to the drafting of the order, Mostyn J noted that the order derived from the standard form of financial order approved and adopted by the FRWG in July 2014.  He quoted from their first report:

’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 [1897] 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.’

Agreeing that it was true that the literal words of ss.23 and 24 MCA 1973 did not provide for the court to be able to make consequential or supplementary provisions of this nature (unlike s.24A(2) MCA 1973), Mostyn J went on to say that s.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.  A proper instrument can then be settled and executed by the parties – an instrument that contains all the terms necessary to deal with a mortgage secured on a property. 

Mostyn J highlighted that the judges dealing with this case had made the basic mistake that their powers were confined to the Matrimonial Causes Act 1973. The Family Court has all the powers of the High Court. The High Court unquestionably has the power, he said, 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 his opinion, this provision is squarely within the power of the High Court to order, and is therefore within the power of the Family Court.

’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.’

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