Divorce: Is a Court Order Set in Stone?


This week, we will take a look at a court case that could have serious implications for anyone who is going through a divorce, or, even more crucially, who has been through one and assumes that with the court case over and the consent order issued, everything is agreed and can be put into the past.

Background

In Birch versus Birch, the divorcing couple agreed the terms of their financial settlement under a Consent Order that was issued in July 2010. The agreement went something like this: The wife wished to remain, along with the two children, aged 8 and 10, in the former matrimonial home, which was at the time held in joint names and was subject to a substantial mortgage.

It was agreed that the husband would transfer his interest in the property to her, and in return, she would release him from any liability under the mortgage. This would give the wife and children a home to live in and continuity, and the husband would be free from financial encumbrance and able to take out a mortgage on a property of his own.

The wife also undertook that in the event she was unable to remove her husband from the mortgage by the end of September 2012, she would do so by means of selling the property.

What went wrong?

As we have mentioned, the mortgage was substantial, and it later emerged that the wife intended to secure her husband’s release from it by either finding a job or obtaining the assistance of a family member to act as a guarantor. Ultimately, neither a job nor a helpful family member was forthcoming, and the mortgage company were not prepared to release the husband from the mortgage covenants.

In November 2011, more than a year after the Consent Order was issued and ten months before the deadline, the wife applied to the court, seeking to “vary” the undertaking that had been agreed in 2010. She explained the problem regarding the mortgage, and pointed out that the children were thriving in excellent schools, and that to move them away would be to their severe detriment.

The nature of the variation was to change the deadline date from September 2012 to August 2019, when the youngest child would turn 18.

The court dismissed the application for lack of jurisdiction, and the Court of Appeal said the same thing. She then took the matter to the Supreme Court, and that is where things got interesting.

Supreme Court ruling

To take a step back for a moment, it is worth outlining what the Supreme Court is all about. In essence, it is the final recourse of appeal in any civil or criminal case. The Supreme Court looks less at the merits or otherwise of a specific case, but more at the points of law on which the decisions were based. As such, when there is a Supreme Court decision to change or overturn a decision made in a lower court, it can be big news with serious implications.

In this case, the Supreme Court found that the problem was not so much in the nature of what the wife sought to do, but in the way she sought to do it. It found that an undertaking, in the legal sense of that made by the wife in July 2010, is tantamount to a promise to do something. As such, a court cannot change or vary the promise, and so the lower courts were right to that extent.

However, it went on to say that the court could certainly consider the concept of releasing someone from such a promise, and this is the way that the application should have been presented.

What does it mean?

It is important to stress that the Supreme Court did not rule on whether the wife could or could not be released, but it did say that the court could hear an application to release or discharge her undertaking. It went on to say that in considering the question, the court would be likely to look at two questions:

  • Has there been a significant change in circumstances since the undertaking was made?
  • Is the applicant looking to make a different undertaking if she is released from the original one?

In the case of Mrs Birch, question one is a moot point. It would seem that she is still in more or less the same boat as she was in 2010, and the real issue is that she made the undertaking under the assumption that she would never have to comply with it – after all, it would only come into effect if she could not remove her husband from the mortgage, and she mistakenly assumed that would not be a problem.

As far as question two is concerned, she is certainly ready to make an alternative undertaking, and it is one that the court is far more likely to view favourably today, in 2017, than it might have in 2011. After all, back then she was looking to exchange a two year deadline for a nine year deadline. But now, she is simply seeking to maintain the status quo that has existed for seven years for another two years.

Implications

Taken at face value, it seems fair that a mother and her children be permitted to remain in the family home until the children have completed their education. But at what cost to the estranged father? Even though he is no longer paying the mortgage, if he is still subject to the covenants, he will find it next to impossible to buy a place of his own.

More broadly, it throws into question the whole notion of undertakings. Here is a case where someone has made a set of undertakings without really thinking them through. Ultimately, if this turns out to be a sufficient reason to her from them, it casts doubts on how useful such undertakings really are in the first place.

If any of the above has struck a chord, the team here at Hylton-Potts is always happy to help. You can call us on 020 7381 8111, or get in touch via email at law@hylton-potts.com.

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