When is a financial provision order not an order?

Standard financial orders

 

In his introduction to Practice Guidance: Standard Financial and Enforcement Orders of 30 November introduced by Ministry of Justice at  Sir James Munby P included the following of the financial orders:

 

These orders do not have the strict status of forms within Part 5 of the FPR 2010 and their use, although strongly to be encouraged, is not mandatory. Moreover, a standard order may be varied by the court or a party if the variation is required by the circumstances of a particular case. There will be many circumstances when a variation is required and departure from the standard form will not, of course, prevent an order being valid and binding. The standard orders should however represent the starting point…

 

‘Strongly to be encouraged, but not mandatory’: that is surely a correct assessment of the law?

 

If this is what Sir James truly believes to be the position in law, and not that this was something that was drafted by a civil servant and merely signed off by the President, then it is different from what Mostyn J asserts is the position in his administrative direction (wrongly described by some – eg Ashley Murray at 1331 [2017] Family Law – as a ‘judgment’) in CH v WH (Power to order indemnity) [2017] EWHC 2379 (Fam). Mostyn J claims that what he said was approved by the President. Either Mostyn J is misrepresenting the President; or the President is – most out of character – confused as to the law. His assertion of the status of the draft orders does not accord with what Mostyn J assrts to be teh position in CH v WH.

 

An order to procure release from a mortgage

 

In CH v WH [2017] EWHC 2379 (Fam) an uncontested consent order was remitted to Mostyn J for approval. The order derived from a draft consent order which was based on financial orders drawn up by the ‘Financial Remedies Working Group’ (FRWG; see Financial Omnibus Orders (the ‘omnibus orders’)). Under Mostyn J’s chairmanship of FRWG the omnibus orders were drafted. Mostyn J takes no account of what was said in Wicks v Wicks (below) of orders which are outside MCA 1973 (see eg his para [8] below).

 

Two district judges had refused to approve the parties’ order which included a requirement that each of them, on receiving a transfer each of two matrimonial properties from the other, should use their ‘best endeavours to procure the release of the other party’ from the mortgage on the property they respectively received. The two district judges thought that to order this – as the omnibus orders require – was outside powers under MCA 1973. They were correct; and force is given to their position by a Supreme Court decision in Birch v Birch [2017] UKSC 53, [2017] 2 FLR 1031.

 

Mostyn J overrode the district judges’ decisions with the words:

 

[10] In my judgment, 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.

[11] That concludes this judgment, which the President has seen and which he approves.

 

Of the need to follow the provisions of MCA 1973 Mostyn J says:

 

[8] It is elementary that the court cannot make orders outside its powers: see Livesey v Jenkins [1985] AC 424 at 444G, where Lord Brandon stated that there was nothing in section 23 or 24 of the Matrimonial Causes Act 1973 which directly empowered the court to make the order requiring the wife, following the transfer of the matrimonial home to her by the husband, to be solely responsible for the mortgage and all other outgoings on it. Such a provision, he said, should have been incorporated in undertakings. It is certainly true that the literal words of section 23 and section 24 do not provide for the court to be able to make consequential or supplementary provisions of this nature, in contrast to the terms of section 24A(2), which explicitly grants such a power when making an order for the sale of property.

 

Inherent jurisdiction and the financial relief jurisdiction

 

What are the court’s inherent powers in financial relief cases? That is, what are the court’s powers outside the four corners of what is provided for under Matrimonial Causes Act 1973 (MCA 1973)? In Wicks v Wicks [1998] 1 FLR 470, [1998] 3 WLR 277 the Court of Appeal considered a judgement in which the first instance judge had awarded sale of matrimonial property and payment of a sum to the wife to enable her, pending a final ancillary relief hearing to buy property. This could not be done because of the variety of statutory provision already available to the courts under MCA 1973; nor could it be done under any inherent jurisdiction in the High Court.

 

Ward LJ (at 490) explained the inherent jurisdiction in words also referred to by Keehan J as:

 

In 1970 Sir Jack Jacob described the inherent jurisdiction of the court as ‘a virile and viable doctrine which in the very nature of things is bound to be claimed by the superior courts of law as an indispensable adjunct to all their powers’ ((1970) 23 Current Legal Problems 52). But in my judgment the inherent jurisdiction, valuable and beneficial though it is in its proper procedural sphere in relation to litigation, cannot be invoked by the court to arrogate to itself the power to give substantive relief, particularly so in an area so much controlled by statute.

 

In Wicks Ward LJ (with whom Peter Gibson LJ and Sir John Vinelott agreed) distinguished between procedural steps, where the court retained inherent jurisdiction, and ‘the power to give substantive relief’. In an area so set about by statutory powers – and with children and CA 1989 – creation of further substantive relief was not available to the courts:

 

The reality here is that the wife is seeking the enforcement of rights which MCA 1973 does not grant her. She wants an order for sale before s 24A allows the court to order it. She wants money to spend on a house before the financial and property adjustments can be made under ss 23 and 24. To submit… that she only seeks the ‘use of certain assets’ (the matrimonial home and the money) ‘pending trial’, and that this is not an interim lump sum order or an interim property adjustment order or an interim order for sale, because they confer ‘upon the recipient no absolute or exclusive ownership of the asset’ is disingenuous. She wants the money to buy a new home in her name, under her control, for her sole enjoyment to the exclusion of the husband. If the substantive law laid down by the MCA 1973 does not permit that to happen, then the court has no inherent jurisdiction to do that which Parliament has not granted it power to do….

 

In Birch Lord Wilson (with whom the majority agreed) said of an undertaking in an order:

 

[5] All three lower courts adopted without demur the wife’s description of her application as being to “vary” her undertaking. But her description betrays a conceptual confusion which it is as well to dispel as this early stage. An undertaking is a solemn promise which a litigant volunteers to the court. A court has no power to impose any variation of the terms of a voluntary promise. A litigant who wishes to cease to be bound by her (or his) undertaking should apply for “release” from it (or “discharge” of it); and often she will accompany her application for release with an offer of a further undertaking in different terms. The court may decide to accept the further undertaking and, in the light of it, to grant the application for release….

[6] In my opinion these proceedings have been bedevilled by a failure to distinguish between the existence of the court’s jurisdiction to release the wife from her undertaking (conditionally, on any view, upon her offering a further one in different terms) and the exercise of its jurisdiction….

 

The Supreme Court held that the wife in Birch could apply to the court to seek release from her undertaking. Whether she should be permitted to do so was a matter with which the lower court must deal. Her application was to be dealt with as equivalent to a MCA 1973 s 24A(1) variation of sale order within the terms of MCA 1973 s 31(7). Undertakings can be dealt with in this way. Different statutory provisions apply for orders; and these do not include release of parties from their undertakings under an order (as approved by Mostyn J in CH v WH).

 

Indemnity from payment of the mortgage in the Family Court

 

Mostyn J refers to his own ‘view’ (most judges would have warned themselves against making any decision in a context such as this, where their mind was already made up on a point, without argument against them). This was set out in the first report of the FRWG which justified including mortgage repayments as part of the order not as an undertaking (he quotes this in full in the case at [5] of CH v WH):

 

Under the new Matrimonial and Family Proceedings Act 1984 s 31E(1)(a) 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 power to order or decree an indemnity. This is an equitable remedy originally vested in the Court of Chancery which was subsumed into the High Court by the Supreme Court of Judicature Act 1873. It was the very relief initially ordered in Salomon v A Salomon and Co Ltd [1897] AC 22 (but which was later set aside by the House of Lords as offending the rule about the separate legal personality of companies)….

 

Some might say that this explanation was ‘sterile, technical’ and obscure, with all respect to Mostyn J and despite the approval – he says – of the President.

 

It has also been suggested by other lawyers that Mostyn J’s treatment of equitable principle is wrong – again it must be recalled that the matter case was not argued before him – is wrong. Because the High Court has jurisdiction to grant a remedy, does not mean it can do so where the cause of action is, for example, ancillary to a cause under MCA 1973. In Salomon an indemnity was available because it was an implied term of the relationship of agency between company and company director. Similarly, the High Court has the power to award damages. It does not follow that it can do so in a case brought under MCA 1973.

 

Indemnity as part of an order: wrong in law?

 

Certainly equitable principle in ancillary relief proceedings was the sort of extra-statutory remedy attempted by Waite J in Barry v Barry [1992] Fam 140, [1992] 2 FLR 233 and disapproved of, and expressly overruled, by Court of Appeal in Wicks v Wicks (where, in this case, the simple remedy of incorporating the indemnity as part of a pre-curial part of the order could have been done). Agreeing with Ward LJ in over-ruling Barry, Sir John Vinelott summarised the inherent jurisdiction position in Wicks v Wicks at [1992] 1 FLR at 489:

 

What is clear is that, for the reasons set out in the judgment of Ward LJ, the claim that the court has an inherent jurisdiction to make an interim lump sum order or to direct the application of assets the subject of a claim for ancillary relief in the way suggested cannot be supported. Part II of the MCA 1973 contains an elaborate code governing financial provision and property adjustment orders which includes, in s 22, provision for maintenance pending suit; it would be remarkable to find that the court has a much wider inherent jurisdiction to make interim orders for lump sum payments or for the application of matrimonial assets for the benefit of one of the parties pending suit….

 

Birch dealt with undertakings and a parties’ release from them; and with how such undertakings might later be varied (a point not considered by Mostyn J). It is not known to what extent the standard orders have been redrafted since Birch or whether Mostyn J drew to the President’s attention that the order he had approved appears to breach Wicks and is probably contrary to the decision in Birch. He cited neither case to himself in CH v WH.

 

Oh and there is an old rule in English common law: that you cannot pick your judge. If Mostyn J was acting as a civil servant – in this case as civil servant in ‘forensic ferret mode’ (per Ward LJ in Harris v Manahan [1997] 1 FLR 205, CA) – so be it; but his decision has no precedent value. It is no more than persuasive, alongside the comments of Sir James Munby P in the introduction to the orders set out above; and to the extent that it has been made without regard to Birch and Wicks it is probably of very little value indeed.

 

If I were asked I would say that, as we have always done, practitioners put into undertakings in the pre-curial part of the order what cannot be done by order under Matrimonial Causes Act 1973. And, unlike Mostyn J, there is no need to go truffling around amongst obscure equitable remedies for recondite orders the court may or may not be able to make.

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4 thoughts on “When is a financial provision order not an order?

  1. Pingback: Top twelve family law cases for 2017 | dbfamilylaw

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