The parties divorced in July 2010 and an order was made by consent whereby the wife would remain in the former matrimonial home with their two children. The husband agreed to immediately relinquish his interest in the property and in return the wife gave an undertaking to secure his release from the mortgage by September 2012, or for the property to be sold if she could not do so. In the meantime the wife would continue to make the mortgage repayments.
Wife’s application (November 2011)
Over a year later, the wife had been unable to secure the release of the husband from the mortgage, and she did not think that she would be able to do so in the time she had left. Under the terms of the undertaking, the wife’s only other option was to sell the property and redeem the mortgage, which she did not want to do. Therefore, she made an application to vary her undertaking.
She sought to postpone her obligation so that the husband would only be released from the mortgage, or else the property sold, when their youngest child reached the age of 18 in August 2019 or when either of their two children had completed full-time education.
The wife’s application was made under s31 Matrimonial Clauses Act 1973 (MCA), which deals with variation or discharge of orders for financial relief. It was her case that the undertaking was equivalent to an order for sale under s24A MCA, to which the power of variation under s31 MCA applies and which requires the Court to give first consideration to the welfare of any children of the family. She argued that to have to sell the property and move would be damaging to the children who are attending nearby schools.
The husband, on the other hand, argued that the order was a property adjustment order, of the type not within the category of orders which the Court has the power to vary under s31 MCA 1973. It was also the husband’s case that the financial order was designed to be a final settlement of their financial claims.
The wife’s application was refused at first instance as the lower courts decided that they did not have jurisdiction. Permission to appeal that issue to the Court of Appeal was granted.
Court of Appeal (July 2015)
In his lead judgment, LJ McCombe said that the undertaking was part and parcel of the original consent order and any variation would undermine the foundations of the final order which the parties agreed to. He focused on the importance of finality and said that the Court has no jurisdiction to revisit final orders in the absence of a vitiating factor such as fraud, misrepresentation or material non-disclosure.
It was held that, although jurisdiction existed for the variation of the undertaking, the scope for its exercise must be extremely limited if the variation sought is an attempt to obtain a different outcome from that agreed at the time of the original consent order. There was thought to be no basis for exercising that jurisdiction in the present case.
Supreme Court (July 2017)
The Supreme Court held that the Court did have jurisdiction to hear the wife’s application. Although, as the lower Courts had correctly identified, they had no power to vary the undertaking, the Court did, however, have the power to grant or refuse an application to be released from the undertaking (with a new undertaking given). The existence of such jurisdiction was supported by the fact that the wife’s undertaking could have been framed as an order for sale under s24A MCA 1973 which could be varied under s31 MCA 1973. However, it was also said that it was hard to conceive of grounds for variation unless there had been a significant change of circumstances, even though that it not technically a requirement for the exercise of the jurisdiction to vary.
The matter will now be returned to the High Court for an urgent hearing, in which the Court will have to decide whether the undertaking should indeed be varied in these circumstances. Important factors to consider will include the welfare of the children, a sufficient change in circumstances, any detriment the husband has suffered/will suffer from the delay in selling the property and the importance of finality and certainty in proceedings.
This is an interesting case and we eagerly await the decision of the High Court. As highlighted in both the Court of Appeal and Supreme Court, the wife’s biggest hurdle will be establishing that there has been a change in circumstances from 2010 significant enough to justify the variation of her undertaking.