When conducting a family law case, chattels are normally dealt with in one of two ways. In some cases, clients will argue tooth and nail over all chattels involved and the arguments themselves will form a large part of proceedings. However, in other cases, chattels are an afterthought, discussed at the door of the Court.
Whilst not often considered, arguments over “chattels” arise in a number of other instances both inside and outside of financial remedy proceedings. When dealing with cases involving chattels of significant value or worth, it is often worthwhile to think through a strategy beforehand as to how best to preserve your position and advance your case.
There are many ways in which chattels can be dealt with. Where parties are married, the normal course is to deal with them under a property adjustment order under the Matrimonial Causes Act 1973 (or the Civil Partnership Act 2004). However, chattels can also be dealt with under section 188 of the Law of Property Act 1925 for general applications, or, where the case does not yet involve divorce proceedings, under section 17 of the Married Women’s Property Act 1882 (again, or the civil partnership equivalent).
Whilst most are familiar with property adjustment orders under the Matrimonial Causes Act 1973, it is always helpful to know what other courses of action are available to them and the benefit in using alternative methods.
Law of Property Act 1925
Section 188 of the Law of Property Act 1925 sets out:
“”Where any chattels belong to persons in undivided shares, the persons interested in a moiety (ie one of two parts) or upwards may apply to the court for an order for the division of the chattels or any of them, according to a valuation or otherwise and the court may make such order and give any consequential directions as it thinks fit.”
Proceedings can therefore be brought by someone (whether spouse, civil partner or cohabitant) who seeks a declaration of beneficial interest in personal property, relying on the Court’s general discretion.
Whilst on the fact of it, section 188 of the LPA appears to be very helpful, from a strict reading of the law it could be interpreted as rather restrictive. Firstly, on a strict interpretation, the legislation appears to imply that proceedings can only be brought by an applicant who believes they have at least a 50% share of interest in the relevant property.
Secondly, the legislation itself appears to infer that an application under section 188 can only be for division and not for sale. In practical terms, this may result in a declaration as to beneficial interests without an order for sale.
The case of Butler and Butler [2016] EWCH 1793 (Ch), [2016] WLTR 1519 provides helpful guidance on the potential limitations of section 188 of the LPA. This case involved four siblings who had been gifted approximately 500 items of 17th century Chinese porcelain by their late father. As a collection, the items were valued at £8,000,000. As is often the case, the siblings could not agree amongst themselves how best to divide the chattels and an application under section 188 of the LPA was made.
Two of the siblings wished for the porcelain items to be split amongst themselves, with each sibling taking a turn to select an item to retain until none remained. In legal terms, they sought that their joint interest in the collection be converted into an absolute interest in the porcelain they selected.
The other two siblings (arguably the more charitable of the siblings) wished to keep the porcelain together as a collection to preserve the value with the entire collection being made available for scholarly study as per their late father’s wishes.
Within the case of Butler and Butler, the Court considered the practical difficulties that arose if section 188 of the LPA were to be strictly interpreted. The Court concluded that in this instance, it would be wholly unsatisfactory to make an order that was not effective. In particular, it considered the implications for cases where certain chattels could not be divided without damage.
Due to the acrimony between the siblings, the Court made an order for division as sought by the first set of siblings. The Court held that section 188 of the LPA empowers the Court to take a flexible, case by case approach and its terms are wide enough to achieve “practical justice” for co-owners.
The parameters of section 188 of the LPA therefore provide a helpful alternative to an application under the Matrimonial Causes Act. An application could be brought to determine the beneficial interest of a specific high-value item (or collection of items) outside of financial remedy proceedings which ultimately may bolster the position when entering in to further negotiations. Section 188 is also helpful to those not married, for instance siblings in the example given above.
Married Women’s Property Act 1882
Occasionally, an individual may seek a declaration in the absence of divorce proceedings or dissolution. In this scenario, section 17 of the Married Women’s Property Act 1882 can be utilised by those who have been married or who have cohabited. By virtue of the Matrimonial Proceedings and Property Act 1970, this has also been extended to encompass couples who have already divorced. However, this has been limited to disputes being brought to the Court within three years of Decree Absolute. It is important to note that such powers are only declaratory and ownership cannot be adjusted as within proceedings for a financial order under the MCA 1973. There is also a civil partnership equivalent contained within section 68 of the Civil Partnership Act 2004. Again, the same three-year time limit applies from the date of dissolution.
This legislation is a helpful tool to practitioners seeking a declaration of interest in specific chattels. The benefit of making an application under section 17 of the MWPA is that any beneficial interest in a particular chattel, or a number of chattels, can be determined far earlier in proceedings or even before proceedings have been issued which ultimately strengthens a negotiation position if and when proceedings are issued.
General guidance
When dealing with chattels, either within financial remedy proceedings or otherwise, there is an abundance of general guidance available to practitioners as to how best deal with them.
In the case of K v K (ancillary relief, property division [2007] 2 FCR 94, the Judge advised that as a matter of practice, the division of chattels should be determined prior to trial with a clear schedule being drawn up denoting where those items are going to. If the parties are unable to agree to such a division, a Scott schedule should be produced which should be marked with the items that are agreed and those that remain in dispute. The Judge also helpfully suggested that where items remain in dispute, the parties should include a note within the schedule to clarify why the particular item is sought by a specific party.
Whilst the guidance set out in K v K may seem excessive, the case of Blooman and Blooman [2009] EWCA Civ 109 is a stark reminder that a failure to address the issue of chattels may result in dire consequences for those involved. In this particular case, the husband belatedly raised a dispute over the chattels within the Former Matrimonial Home. The dispute was not raised at the FDR hearing, after which the wife proceeded to sell all the chattels for a nominal value. Somewhat understandably, the husband then sought to raise the issue and wanted the matter remedied by the Court. In this case, the Judge found that the husband’s remedy now lay with his solicitor rather than un-doing all the other agreements that had been reached with the wife. The Judge found that the blame lay with the husabnd’s solicitors for not having raised nor dealt with the issue of chattels prior to the FDR.
Finally, as is always the case, the Courts are mindful of the costs involved. The case of B v B [2013] EWCH 1232 (Fam) considered the issue of costs specifically within the context of chattels. Within the case, it was held:
”As the rules now make clear, proportionality is the name of the game when costs are so high and court time is more and more at a premium. A much more rigorous approach to case management (especially in the field of the employment of experts) is being introduced in other areas of the family justice system to save precious time and money. This type of high value litigation cannot expect to be immune and parties to it can expect to be confronted more and more by a refusal of the court to participate in these disputes over the lesser assets and where in each case the difference is about 1% of the net value of the pot or less.”
In some instances, the costs incurred when dividing up chattels may far outweigh the value of the items themselves. It is rare that financial remedy cases will involve chattels comparable to £8,000,000 worth of Chinese porcelain and as a result, both practitioners and clients should always have proportionality at the forefront of their minds when disputes arise in respect of chattels. Individuals should be alive to the alternative options available to them, for instance mediation. Whilst often seen as laborious, agreeing division of chattels through inter-party correspondence will also often be far more proportionate than parties arguing about individual chattels in Court.
