Interim sale of the family home in financial remedy proceedings

Divorce & Matrimonial Finance

23 April 2018

Can you get an order for sale of the family home before the final hearing?

As of a few weeks ago, and some 45 years after the Matrimonial Causes Act was enacted, it became apparent that eminent High Court Judges disagree on both the jurisdiction and the basis for such an order.

So can you & how?

1.      Of course normally the decision about whether or not to sell the family home (or any other property) will not be made until the final financial remedy hearing but, there could be very good reasons for doing so at an early stage of the proceedings, for instance, if the parties can no longer afford the mortgage and the property will be repossessed if it is not sold.   If nonetheless one party refuses to agree to a sale or, is perhaps preventing it by refusing to accept that the price must be reduced, can the court order an interim sale?

2.      The problem is that there is no provision in the Matrimonial Causes Act 1973 (MCA) for ordering interim sale and those sections that provide for property adjustment and sale do so only in respect of final orders:  S.24 provides for final orders, including property adjustment orders, only to be made after decree and S.24A provides for an order for sale only on or after such an order.

3.      On the other hand, Rule 20.2 (1) (c) (v) of the Family Procedure Rules 2010 (FPR) provides that “the court may grant the following interim remedies …an order for …sale of relevant property which is of a perishable nature or which for any other good reason it is desirable to sell quickly” and, by sub-section (2) that “relevant property means property (including land) which is the subject of an application or as to which any question may arise on an application”.  So, despite the first emphasis being on perishable property, this clearly covers the family home or other real property and is perfectly capable of covering a dispute over sale at an interim stage where it is argued that there is a good reason to sell quickly.

4.      But, fundamentally, can that procedural rule on its own authorise an interim power to order sale in the face of the MCA not creating such a power in the first place?  According to Mostyn J the answer is yes but, according to Cobb J it is no.  If not, is there an alternative?  And also, do the Family Law Act 1996 (FLA) powers (occupation order etc) need to be invoked to order delivery up of possession, a subject on which their Lordships also appear to disagree?

5.      In BR v VT (Financial Remedies: Interim) [2015] EWHC 727 (Fam) [2016] 2 FLR 519, Mostyn J ordered interim sale of the family home under r. 20.2 FPR.  His Lordship said [para 3] that “the route that is barred is section 24A” (for the reasons set out above) but, held that there are three alternative procedural routes to this end:  (i) S.17 of the Married Women’s Property Act 1882 (MWPA);  (ii) SS. 13 & 14 of the Trusts of Land and Appointment of Trustees Act 1996 (TLTA) and, (iii) Rule 20.2 of the Family Procedure Rules 2010 (FPR) [para 2].  There were no MWPA or TLTA applications before the court but, the issue that troubled his Lordship most was that, although the property was in the husband’s sole name, the wife had home rights and the court would therefore have to make an order terminating those rights and requiring her to give vacant possession.   It is not clear from the Judgment whether both parties conceded that r. 20.2 provided the jurisdiction for an order for interim sale but it is expressly stated that both Counsel agreed that the wife’s home rights could only be terminated under S.33 (3) (e) of the Family Law Act 1996 (FLA) applying the factors in S. 33(6) [para 10].  His Lordship discussed in the Judgment whether the MWPA and TLTA provided powers to order vacant possession without invoking s.33 FLA and believed that they did [paras 5 & 9] and that dicta from Ward LJ in Wicks v Wicks [1998] 1 FLR 470 did not have the opposite effect particularly in the light of an earlier decision of the Court of Appeal in Short v Short [1960] 1 WLR 833.  But, His Lordship applied the S.33 FLA factors and the r.20.2 good reason test, determined that it was essential that the family home be sold as soon as possible to pay off pressing debts and that the wife was sticking her head in the sand and so, terminated the wife’s home rights and made the order for interim sale under r.20.2.

6.      In WS v HS [2018] EWFC 11, decided on 28/2/18, Cobb J allowed the wife’s appeal against a District Judge’s order for interim sale.  His Lordship stated almost immediately that he took a different view about jurisdiction to Mostyn J in BR v VT [para 5].  His Lordship did not expressly state that he found Mostyn J’s decision to have been made ‘per incuriam’ but presumably he did.  Before the District Judge the wife’s Counsel conceded jurisdiction under r.20.2 (which in the light of BR v VT was surely unavoidable) but in front of Cobb J that concession was disavowed and further, Counsel for the husband conceded that, as the wife was joint owner (unlike BR v VT) and therefore had a legal and beneficial interest, S.33 FLA could not be used to terminate her rights and give vacant possession.  Cobb J held that:

(i)      The Court possesses the power to make interim orders for sale of the matrimonial home pursuant to S.17 MWPA and SS.13-14 TLTA  [paras 28 & 48].

(ii)     Mostyn J was both right that Ward LJ’s obiter in Wicks v Wicks (above) did not prevent S.17 MWPA from conveying the power to order possession and right to prefer the earlier Court of Appeal decision [ratio, not obiter] in Short v Short (above).  And SS.13-14 TLTA are to the same effect [paras 29-30].

(iii)    The MCA does not provide for an interim order for sale and the procedural rule in r.20.2 FPR cannot achieve a substantive remedy that the statute itself does not provide [paras 34, 35 & 44-46]; nor can the inherent  jurisdiction [para 42].

(iv)    Without an application under MWPA or TLTA this appeal must fail [para 49] but “I am satisfied that applications under either statute would provide the court with inherent [?] power for the court to order vacant possession of the property” [para 48].

(v)     Once the substantive jurisdiction is laid before the Court, at this stage rule 20 FPR comes into play [para 50].

(vi)    S.33 FLA is not the proper route when the Respondent has a legal and beneficial interest [paras 51-53] – it is not clear whether His Lordship is saying that S.33 is not required where the Respondent has home rights pursuant to S.30.

(vii)   Once there is a proper application before the Court to which rule 20.2 (1) (c) (v) can attach, there is a two stage test: (a) is the property perishable or is there any other good reason for making the order and, then (b) the exercise of the Court’s discretion.  Quoting from a civil High Court case on an equivalent provision:

“The purpose of the court in exercising the power to order sale is to avoid the injustice that would otherwise result by the property becoming worthless or significantly reduced in value during the interval between the application for sale and the determination of the proceedings” [para 56].

Clearly that is sufficient if one party is unreasonably refusing to sell or reduce the price and repossession is the likely result.  And Cobb J added: “plainly if good reason is made out for an interim sale, this will be a powerful factor in the discretionary exercise” [para 58].  His Lordship then referred to Miller-Smith v Miller Smith [2009] EWCA Civ 1297 [2010] 1 FLR 1402 and cautions that the Court will be slow to take an interim step that may pre-empt the exercise of the discretion at final hearing [which of course it need not if the proceeds of sale are used to pay off debts and/or held neutrally pending such final decision] but then returns to the “good reason” test [paras 59-61].

7.       Conclusion: No doubt recognising that a situation where two eminent High Court Judges disagree on both jurisdiction and hurdles is not a happy one, particularly when it comes to something so fundamental as interim orders for sale, Cobb J concludes his judgment by suggesting that “the issue of interim capital relief is one which is now long overdue for reform.”  But, what in the meantime?  My tentative suggestion is this:

(i)      For the reasons set out in WS v HS, it is difficult to see how r.20.2 FPR could in fact create a free standing remedy.

(ii)     Both decisions agree that S.17 MWPA provides a substantive remedy and a possible route to an interim order.

(iii)    S.17 MWPA applies to “any question between husband and wife as to the title to or possession of property” and provides that the court “may make such order with respect to the property as it thinks fit”.

(iv)    Although Ward LJ did make some obiter comments in Wicks v Wicks about the MWPA not providing for an order for possession, the earlier Court of Appeal decision in Short v Short is to the opposite effect as part of the ratio.

(v)     But also, what neither decision mentions, is:

(a)               S. 7(7) of the Matrimonial Causes (Property and Maintenance) Act 1958, provides that “for the avoidance of doubt it is hereby declared that any power conferred by the said section seventeen [MWPA] to make orders with respect to any property includes power to order sale of the property.”

(b)     S.17 MWPA itself refers to “possession”.

(c)     Rule 8.13 FPR expressly provides for applications under s.17 MWPA made in any proceedings for a financial order to be made in accordance with the Part 18 FPR procedure.

(d)     Rule 8.17 FPR dictates that r.9.24 applies where the court has made an order for sale under s.17 MWPA and, r.9.24 provides that the court may order any party to deliver up to the purchaser or any other person possession of the land and receipt of rents or profits relating to it.

(e)     In those circumstances it is difficult to see why there would need to be recourse to S.33 FLA at all.  If, in respect of a Respondent who has a proprietary interest, that legal interest falls to be determined under the MWPA and the FPR, it would therefore surely be odd if, in respect of a Respondent with only home rights, a further application had to be made and a further statutory hurdle had to be overcome in the form of the test for an occupation order; but, in that particular situation, given what was said in BR v VT, it may currently be safer to make that application too.

(f)        In any event,   once the MWPA application has been made as a Part 18 FPR application and within the financial remedy proceedings pursuant to r.8.13 FPR, there can surely be no doubt that r.20.2 (1)(c)(v) FPR also applies and that therefore an interim order can be made

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