News

The Family Court Has All The Powers of the High Court – A Tale of a Frustrating Battle in Southampton

Wed 3rd Jan 2018

It is always a source of some frustration when, having laboured over a consent order after difficult negotiations, parties are unable to agree on the wording or even structure of the said order. In Southampton, this battle took hold, but unusually between the parties and the Deputy District Judge who was asked to approve it.

In CH v WH [2017] EWHC 2379, a draft final consent order (which concluded financial remedy proceedings) was sent in to the Family Court at Southampton.

The parties jointly owned two properties. The order provided for one property to be transferred to the wife, and the other to be transferred to the husband. Both properties were the subject of outstanding mortgages. The usual wording as to each party using their best endeavours to procure the release of the other from the mortgage on the property they were retaining and indemnify the other against liability thereunder, were included in the main body of orders.

Also included in the ‘orders section’ was provision for the wife to resign as director of a company and transfer her shares to the husband for which he would provide her with an indemnity in respect of any liability arising.

Deputy District Judge Underhill refused to approve the draft order twice. That refusal, insofar as the releases and undertakings connected with the mortgages was concerned, was upheld by District Judge Sparrow on the ground that certain of its provisions were outside the power of the court to order.

DDJ Underhill considered that the troublesome provisions should have been included as recitals rather than orders as he considered the court did not have the power (to order an indemnity) to make such orders under the Matrimonial Causes Act 1973. DJ Sparrow held “there is no power set out in the Matrimonial Causes Act 1973 to order someone to use best endeavours to procure release from a mortgage”.

The matter progressed on a referral from the wife’s solicitors and came before Mostyn J. In his judgment he was certainly direct and reflected the frustration which must have been felt by the parties and their representatives (see reference in paragraph 7 of his judgment “to my knowledge, over the last three years the orders in questions have been made routinely until this problem has arisen in Southampton”).

He approved the order (which followed Mostyn J’s precedent) on the basis that the “objectionable terms are fully within the power of the court to order”.

Mostyn J held (paragraph 9):

“The basic mistake made by the judges in Southampton is to assume that their powers are confined to the four corners of the Matrimonial Causes Act. The Family Court has all the powers of the High Court. The High Court unquestionably has the power, as part of its equitable jurisdiction, to order an indemnity. If awarded, that represents a legal right in favour of the person so indemnified. The court can award an injunction in support of a legal right. To order someone who has been ordered to indemnify the other party in respect of a mortgage to use his or her best endeavours to keep up the payments on that mortgage is of the nature of an injunction in support of a legal right. In my opinion, this provision is squarely within the power of the High Court to order, and is therefore within the power of the Family Court.”

Pulling no punches, in the final part of his judgment he considered:

“…these sterile, technical objections to orders in these terms must cease. They have caused needless delay and have no doubt increased costs and caused other inconvenience.”

Mostyn J’s decision is not surprising given previous comments he made when a member of the Financial Remedies Working Group and its 2014 report (to which he specifically drew attention in the instant case). He gave the following examples when a court had the power to order one party to make mortgage and/or other household payments and to indemnify the other party against non-payment:

  • under s 31(E)(1)(a), Matrimonial and Family Proceedings Act 1984, in any proceedings in the Family Court, the court may make any order which could be made by the High Court if the proceedings were in the High Court;
  • the High Court has the power to order or decree an indemnity as part of its equitable jurisdiction (Salomon v A Salomon and Co Ltd[1897] AC 22);
  • the award of an indemnity represents a legal right in favour of the person indemnified. The court can award an injunction in support of a legal right. To order someone, who has been ordered to indemnify the other in respect of a mortgage, to use their best endeavours to keep up the payments, is of the nature of an injunction in support of a legal right;
  •  it was necessary to spell out the power in Family Law Act proceedings, because the wider direct power does not exist in those proceedings;
  • it would be anomalous if the power to order payment of outgoings only existed in Part IV proceedings, but not in financial remedy proceedings;
  • it was necessary for the court to have these powers if only to cover the position where a party was not prepared to give the necessary undertakings or was refusing to participate in proceedings; and
  • s.30 Matrimonial Causes Act 1973 gives the court the power when making a property adjustment order to direct that the matter be referred to one of the conveyancing counsel of the court to settle a proper instrument to be executed by all necessary parties. This instrument in question could contain terms which furnished all necessary indemnities and obligations to pay instalments in relation to a mortgage secured on the property.

The President approved Mostyn J’s judgment, which categorically ends the debate as to the power of the Family Court.  It is also perhaps the least surprising judgment given the “Mostyn Precedents” themselves contain such provisions as orders rather than undertakings to be included in the preamble of the order (as has been the way for many years).

Adam C. Willoughby

Barrister

← Back to News & Resources