The Supreme Court has determined that a wife’s application to be released from an undertaking to sell the former matrimonial home in recitals to a consent order may be heard.
Birch v Birch
Case details
The key facts of the case can be found below:
- The husband and wife entered into a consent order on 28 July 2010.
- Part of the order provided that the husband should transfer to the wife his legal and beneficial interest in the matrimonial home subject to the mortgage, so that the wife could continue to live there with the two children of the family.
- In return, the wife undertook to discharge all mortgage payments, to indemnify the husband against any liability under it and to use her best endeavours to release him from the covenants under it.
- Then, crucially, she undertook that, if the husband had not been released from his mortgage covenants by 30 September 2012, she would secure his release by placing the home on the market for sale and proceeding to sell it.
- On 18 November 2011, the wife, who had duly discharged the mortgage payments, issued an application to “vary” her undertaking. She explained that she had not been able to secure the husband’s release from his mortgage covenants and would not be able to do so by 30 September 2012.
- The children were in schools in the vicinity of their home and it would be gravely damaging to their interests for them to have to move home while still at school. In such circumstances she sought a “variation” of the undertaking, so as to postpone for seven years her obligation to secure the husband’s release from his covenants under the mortgage by sale of the home until 15 August 2019, being the date of their son’s 18th birthday.
Supreme Court decision
The Supreme Court, by a majority of 4 to 1, allowed the wife’s appeal and held that jurisdiction exists to hear the wife’s application. Lord Wilson gave the lead majority judgement, with which Lady Hale, Lord Kerr and Lord Carnwath agreed. Lord Hughes gave a dissenting judgement.
The description of the application as being to “vary” the wife’s undertaking is confused. The court’s power is only to grant or refuse an application for release from the undertaking. Although the court’s exercise of its power may result in something which looks like a variation of an undertaking, if it decides to accept a further undertaking, it is the product of a different process of reasoning.
The Court gave first consideration to the welfare of the two children; but it is a consideration which may be outweighed by other factors. The Court had to have regard to all relevant circumstances including in particular, whether the wife can establish a significant change of circumstances since her undertaking was given and whether, and if so to what extent, the husband has suffered, and is likely to continue to suffer, prejudice by remaining liable under his mortgage covenants.
Lord Hughes gave a dissenting judgement and stated that:
“the acid test should be whether the application is in substance (impermissibly) to vary or alter the final order or whether it is (permissibly) to support it by working out how it should be carried into effect. The application in the present case, he says, is one which attempts to vary, not to carry into effect, the originally agreed and court-endorsed order and therefore the Court of Appeal was right to hold that it was bound to fail.”
How Nelsons Can Help
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