When can a financial undertaking be varied by the court?

In Birch v Birch [2015] EWCA Civ 833 the Court of Appeal considered the sometimes troubled area of matrimonial finance undertakings in court orders. Briskly the court establishes three factors:

  • That in only rare circumstances, and then only in circumstances equivalent to those in Matrimonial Causes Act 1973 s 31(2), can undertakings in a financial relief order be varied;
  • That MCA 1973 s 24A (court’s power to order sale of property following certain orders under MCA 1973 ss 23 and 24) is procedural only: it cannot be used to support a free-standing application for sale; and
  • Any variation under (1) must normally be proceeded with within a relatively short period after the originating order (see per Gross LJ at [48]).

In July 2010 Mrs Birch agreed to a transfer of the parties’ former matrimonial home to her sole name subject to the outstanding mortgage (para 1 of the curial part of the order), but on the following terms undertaken by her:

  • That she would ‘use her best endeavours’ to secure Mr Birch’s release from any liability under the mortgage; and in default by 30 September 2012
  • That she would sell the property.

She wanted the second undertaking varied so she could stay in the house till the youngest of three children was 18 (youngest now 13, with another child later born to Mrs Birch).

Jurisdiction to vary an undertaking

The appeal considered whether the court has jurisdiction to vary an undertaking: the district judge and judge below had said not.

McCombe LJ considered the case in the context of Omelian v Omelian [1996] 2 FLR 306, CA which dealt with very similar circumstances and in which Thorpe LJ had said (picking up (1) and (2) at the beginning of this note), of the procedural aspects of MCA 1973 s 24A(1):

… Section 24A is a purely procedural section inserted into the statute to clarify or expand the court’s power of implementation and enforcement. Any power to vary such procedural enactment must be construed to be equally limited to matters of enforcement, implementation and procedure….

McCombe LJ quotes this and other passages from Omelian at §[16] and confirms his agreement with Thorpe LJ:

[27] … [As Thorpe LJ said] we must have regard to the statutory context, which makes it clear that a primary property adjustment order under section 24(1)(a) and a lump sum order under section 23(1)(c) are not subject to the section 31 jurisdiction, save (in respect of the latter) a lump sum payable by instalments: section 31(2)(d). The principal function of section 31 is to permit variations of periodical payments and the like. It is also clear, as explained in Omielan, that section 24A is a purely procedural section limited to matters of enforcement, implementation and procedure in respect of any order to which a section 24A order for sale is attached.

Though Omelian was not cited to him, Coleridge J agreed with this view in V v V (Financial Relief) [2005] 2 FLR 697 and N Mostyn QC (as a deputy High Court judge) in Le Foe v Le Foe and Woolwich plc [2001] 2 FLR 970, Nicholas Mostyn QC (as a deputy High Court judge) – with respect – was wrong (at §[76]; though he was plainly right to say I was wrong over waiver of without prejudice privilege).

Thus if undertakings are to be varied they must come within the terms of the primary legislation – MCA 1973 s 31 – to vary; and s 24A(1) only does this so far as it comes within the very narrow range of variation of settlement terms permitted by s 31(2)(f); and the fact that the undertakings here supported the s 24A(1) order, and thus not bringing them within s 31(2), meant it could not be varied.

In conclusion, said McCombe LJ (with whom Kitchen and Gross (with slight reservations: §[47]) LJJ agreed), the court does have theoretical power to vary an undertaking; but its reality must be examined:

[44] … it seems to me that there does exist a formal jurisdiction in the court to vary this undertaking. However, when the variation sought is, in effect, an attempt to substitute an entirely different outcome from that provided for by the original consent order, the scope for the exercise of the jurisdiction must be extremely limited indeed. While I recognise the existence of the jurisdiction to vary the undertaking, on what we have been told as to the basis of the proposed variation application, I can see no basis upon which the court would exercise the jurisdiction in the present case. In the circumstances, I consider that we should invite further submissions in writing from counsel as to whether the realities dictate that the right course is to dismiss the appeal.

Nominally the wife was right (ie on narrow basis defined by variable orders under s 31(2)): the court has power to vary an undertaking; but on these facts she was bound to fail, and the appeal was dismissed (§[49]).

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