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.

LITIGANTS IN PERSON: BEWARE

Court: not an ‘advice bureau’ for litigants in person

Mostyn J’s July 2014 judgement in Bakir v Downe [2014] EWHC 3318 (Fam) was transcribed at public expense because Mostyn J wanted to make a point about use of the court not being an advice bureau. The passage which has been – and doubtless will continue to be – quoted extensively already, is as follows:

[8] The courts are now being visited with an increasing number of informal applications made by litigants in person. As I have said in this case, Mr. Downe acts as a litigant in person by election [ie he has the means to pay but chooses not to]. I am taking the opportunity in this judgment, which will be transcribed at public expense and placed on Bailii, to explain, both for the benefit of Mr. Downe and for any other litigants in person, that the court does not afford any indulgences or deviations to the litigants in person from the clear procedure that is prescribed for the procedure that is prescribed for all applications that are made to the court. The court is not some kind of advice bureau for the benefit of litigants in person who do not understand how orders have been made. If a litigant in person wishes to make an application to the court, then he must do so in accordance with the procedure laid down by the law of the land.

Mostyn J then went on to explain the FPR 2010 Part 18 procedure in language which most litigants in person – and some modern lawyers – will struggle to understand; and which make assumptions which may come close to breaching European Convention 1950 Art 6(1):

[9] [The Part 18 procedure] requires an application to be made. It requires a fee to be paid. It requires a draft order to be supplied. It requires the relief that is sought to be clearly specified. None of that has happened here. Even now I am unable to understand what relief Mr. Downe is seeking in circumstances where his complaints are entirely academic by virtue of the fresh undertakings given to Moor J. on 27th June 2014. As I have already said, but I reiterate, there is no requirement for an undertaking which is given in the face of the court and recorded in the transcript to be separately recorded in a general form of undertaking (emphasis added).

There was nothing for Mostyn J to decide (as he says); though he deemed an application and then dismissed it with costs against Mr Downe. The note issued by Mostyn J, and its publication at public expense, was an indulgence to satisfy his irritation at his clerk being inconvenienced. The case raises further issues.

Undertakings and orders

The case concerned a return date freezing order injunction application where, says the judge:

[1] … I was doubtful whether the relevant criteria for making an ex parte freezing order, as summarised and explained by me in the case of UL v BK [reference below], had been met.  However, the Respondent husband offered me in court an undertaking to preserve two funds [set out]….

[2] On that basis counsel for the wife, Mr. Mitropoulos, drafted an order containing that undertaking and in accordance with the usual practice drafted a general form of undertaking for Mr. Downe to sign.  Mr. Downe, however, refused to sign the general form of undertaking.

The judge went on to confirm that the signing of the form ‘is not a requirement for the giving of an effective undertaking.  That undertaking had plainly been given in the face of the court’. He had already set out his exchange with Mr Downe in para [1].

If authority for this proposition is required it can be found in Zipher Limited v Markem Systems and Technologies [2009] EWCA Civ 44 and Hussain (cited below). In Zipher Lord Neuberger MR said:

[19] An undertaking is a very serious matter with potentially very serious consequences. It is a solemn promise to the court, breach of which can lead to imprisonment or a heavy fine. Accordingly, there should never be room for argument as to whether or not an undertaking has been given. … Accordingly, any undertaking should be expressed in full and clear terms and should also be recorded in writing.

[20] None of this is either controversial or original. Unsurprisingly, it is well established. In Hussain v Hussain [1986] Fam 134, Sir John Donaldson MR said at 139H that “an undertaking to the court is as solemn, binding and effective as an order of the court in like terms”. He went on to observe at 140E that “it is in all cases highly desirable that any undertaking to the court shall be recorded and served on the giver personally”. As he immediately went on to say, the “most obvious and convenient way … is to record the undertaking in an order of the court …”. Neill LJ took the same view, stating at 142A-B that “the general practice to be adopted” was that the “undertaking should be included in a recital or preamble in the order of the court”, which should be issued and served on the person who gave the undertaking with a penal notice. He went on to emphasise the importance of clarity and certainty in relation to what was required by any undertaking, and the consequences of it being breached. Ralph Gibson LJ agreed with both judgments.

As can be seen the requirements of FPR 2010 as to signature (eg at Practice Direction 33A: as is well known a practice direction cannot change the law, as set out in Hussain) is beyond anything that the common law requires.

If judges drew up the orders themselves and ensured that their order was endorsed with a penal notice, sealed and served – if possible before the undertaker (sorry, but that is what s/he is) leaves court – then many of the problems which arose in this case would have been avoided. After all in these days of unrepresented litigants presumably the courts are becoming used to drawing up their own orders, and to serving them for parties.

‘…explained by me in the case of UL v BK…’

The quote above is a reference to UL v BK (Freezing Orders: Safeguards: Standard Examples) [2013] UKHC 1735 (Fam) in which Mostyn J again was not dealing with any live issue: he made clear at para [7] of a 80 paragraph judgment that the wife’s claim was hopeless. Most of the rest of what he said was obiter and consists of some dangerous assertions of his views and gratuitous guidance to practising lawyers (Imerman documents (after Imerman v Tchenguiz and ors [2010] EWCA Civ 908 and the cheat’s charter about which I wrote in https://dbfamilylaw.wordpress.com/2014/02/02/mostyn-j-condones-non-disclosure-imerman-documents-and-ul-v-bk/ .)

Now is not the time to examine in detail Mostyn J’s discussion – for that is all it is – of the law in that case. He confuses inherent (codified in Senior Courts Act 1981 s 37: what he calls a ‘hybrid’ jurisdiction), with statutory, jurisdiction (as in Matrimonial Causes Act 1973 s 37(2): ie by which a new remedy is created) to grant an injunction. On the basis of his confusion he proceeded to say that the Court of Appeal and two of his brother puisne judges got the law wrong (including Anthony Lincoln J, who well understood the difference between inherent and statutory jurisdictions in Shipman v Shipman [1991] 1 FLR 250).

He then spent some 30 paragraphs explaining what should be done; and repeated what is in such text books as Family Court Practice (eg under FPR 2010 Part 20, to which he could have referred practitioners). He concluded with his gratuitous and unprincipled guidance on ‘illegitimately obtained documents’.

Family Procedure Rules 2010 Part 18: European Convention 1950 Article 6

What will a litigant in person make of the word ‘relief’ (see para 9 above)? For many it is associated with passing wind or more. The modern word is ‘remedy’, which accords with the original Latin ubi jus ibi remedium (where there is a law, there must be a remedy). And where can a lay person find an idea of what the remedies might be; and, more to the point, and so they get their application on the road, what draft orders there might be to seek those remedies. I can understand Mostyn J’s irritation with Mr Downe; but a modern judge is not paid to be irritated by this sort of thing.

If judges approach cases in the way that Mostyn J did, there is a real question as to whether the Family Division is complying with its duties to provide a fair trial. I have appeared before Mostyn J in a mood to ignore rule, practice guidance and everything else. He asserted principles of procedure which were not true (and he knew it, though would not have the grace to admit his errors). I could put him right: I knew the rules and that rules he referred to did not exist. Where is a litigant in person to be where the law is ignored in such a way? (Two QCs appeared before him in UL v BK and seem to have let him get away with it; or, in fairness, for the mangled wife there was no possibility of appeal.)

English courts must comply with the Convention (Human Rights Act 1998 s 6(1) and (3)(a)); and if they do not they can be hauled up on appeal (HRA 1998 s 9(1)). Judicial unhelpfulness and obstructiveness towards litigant in person must rank towards failure to provide a fair trial.

‘… the procedure laid down by the law of the land…’

It would be pedantic to point out that procedure is not ‘the law of the land’; but the point is worth making. Modern Family Division and family court judges are slack with their regard for the vires of the rules and of what they are doing. (Three examples appear above; and Mostyn J’s assertions about hybrid jurisdiction and his failure to think through the results of his Imerman guidance are examples of this).

It is worth recalling always what is law, what is procedure which guides the law, and what is mere direction and guidance which should only supplement rules. A litigant in person cannot be expected to know all this. Lawyers should do so and challenge the rule-makers where needed. Judges – if they are to provide a fair trial – should be willing to do the same. If they do not the rule of law in family courts will wither increasingly and unlawfulness – eg Sir James Munby P’s Alsatia (see Richardson v Richardson [2011] EWCA Civ 79) – will thrive.