DW (First Appellant) CW (Second Appellant) v CG
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Moylan |
| Judgment Date | 21 November 2016 |
| Neutral Citation | [2016] EWHC 2965 (Fam) |
| Date | 21 November 2016 |
| Docket Number | Case No: FD02D01434 |
| Court | Family Division |
2016 EWHC 2965 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Moylan
Case No: FD02D01434
and
The First and Second Appellants appeared in person
Mr Nicholas Fairbank (instructed by Debenhams Ottoway LLP) for the Respondent
Judgment Approved
Introduction
This is an appeal from the Order dated 11 th February 2016 ("the Order") made by Deputy District Judge Simpson ("the judge") determining a number of issues in respect, principally, of a property known as 14 DL ("14 DL" or "the Property"). The appeal is brought with permission granted by the judge.
In this judgment, for ease of reference, I will call the First Appellant "the husband" and the Respondent "the wife" although they were divorced many years ago. The Second Appellant is the husband's current wife.
The issues which were determined by the judge, and which require determination in this appeal, arise out of a final consent order made by District Judge Waller (as he then was) on 20 th August 2009 determining financial remedy proceedings ("the 2009 order"). The key issues are:
(a) What is the effect of the 2009 order; did it give the wife an equitable interest in the Property?;
(b) If it did, what is the effect of the husband's subsequent bankruptcy and of events within the bankruptcy on her equitable interest?;
(c) If it survived the bankruptcy, what is the effect on the wife's interest of a Settlement Agreement dated 14 th April 2014 (between the husband and the Second Appellant and their respective trustees in bankruptcy) and a Declaration of Trust dated 14 th April 2014 (between the husband and the Second Appellant)?;
(d) Should the Declaration of Trust dated 14 th April 2014 be set aside under section 37 of the Matrimonial Causes Act 1973?
There is also an issue as to the value of the Property, The Order contains a recital that the court is "satisfied that £565,000 is a reasonable price for the sale of (the Property) having considered three letters from estate agents accompanying the (wife's) application dated 13 th November 2014 and the sale ordered on 3 rd November 2014 may proceed".
The focus of the hearing before me was on the Property, with very little attention being paid to another property, namely 67 KR. Both the Property and 67 KR ("the properties") are largely, although not entirely, in an equivalent position. They have both always been registered in the husband's sole name. The difference in the application of the principles set out below results from the fact that the Property is, and at all relevant times has been, the wife's home while 67 KR is the home of the husband and the Second Appellant.
The judge decided that the 2009 order gave the wife an equitable interest in the properties. This interest was not affected by the husband's bankruptcy and was not waived or otherwise lost during the bankruptcy. Without, at this stage, going into any detail, the judge also decided that the wife's interest remains enforceable against the husband and the Second Appellant. She decided, alternatively, that the Declaration of Trust dated 14 th April 2014 ("the Declaration of Trust"), by which the husband and the Second Appellant declared, among other things, that the husband held the properties for the benefit of the Second Appellant alone, should be set aside under section 37 of the Matrimonial Causes Act 1973 ("the MCA 1973").
The judge dealt with the case on submissions alone. She gave permission to appeal at the end of the hearing (which took place on 20 th November 2015 and 11 th February 2016) and before she had given judgment. This led both to the Order being made (on a date after the hearing) and to the Appellants filing their Notice of Appeal (with Grounds of Appeal) on 2 nd March 2016 before the parties had received the judgment which was provided, in writing, on 14 th March 2016.
The grounds of appeal cover a broad range of matters both substantive and procedural. The Appellants raise a number of issues about the conduct of the hearing before the judge, such as whether they were given sufficient time to make their submissions. They also challenge the sufficiency of the judgment.
Given that the judge gave the Appellants permission to appeal and given my own concerns about the sufficiency of the judgment (which is extremely brief), I have, effectively, reheard the case, again on submissions alone. I am satisfied that, save in respect of the section 37 application (as set out below), I have thereby remedied any inadequacies there might have been, both in the conduct of the hearing before the judge and in the judgment.
At the end of the hearing before me, I adjourned the case because I did not consider that the parties had dealt sufficiently with the effect of the 2014 transactions on the enforceability of any interest the wife might have. Accordingly, I directed the parties to file submissions dealing with the enforceability of the wife's equitable charge (on the basis that such exists) against the husband and the Second Appellant as purchasers of property from the trustee in bankruptcy. All three parties have provided additional written submissions.
Background
By the 2009 order the husband was required to pay the wife a lump sum of £375,000 in three instalments. The husband paid the first two instalments, of £25,000 and £175,000, but has not paid the third instalment of £175,000 which was originally due by 30 th April 2010 and then extended to 31 st August 2010.
The order further provided that, in the event of the husband failing to pay any instalment, the wife was entitled to sell a number of properties to recover the lump sum due to her. The relevant paragraph reads as follows:
"3. Pursuant to the terms hereof in the event that the (husband) defaults in payment of any instalment in respect of the settlement herein by the due dates then the (husband) grants the (wife) an irrevocable authority to offer for sale the following properties which shall be sold forthwith on the open market the (wife) using her best endeavours to maximise the value received:
(i) 14 DL …
(iii) 67 KR …
(and another property, 45 NW)
whereupon the net proceeds of sale … shall be paid to the (wife) insofar as will be required to fund the settlement to her together with interest."
Paragraph 4 of the order contained detailed consequential provisions in the event of a sale of the properties including as to the distribution of the proceeds of sale. After payment of mortgages, costs of sale and capital gains tax, the wife was to be paid the lump sum due to her and interest. The balance, if any, was to be paid to the husband.
The husband also undertook:
"until payment in full of the … (lump sum not to) carry out any dealings of any nature whether by way of sale, assignment, mortgage, further advance or otherwise in relation to nor take any steps that might adversely affect the values of the properties at 14 DL … and 67 KR …; in the case of DL without the prior written consent of the (wife) such consent not to be unreasonably withheld and in the case of … 67 KR without the (husband) first giving notice to the (wife); and in all cases on the (husband) providing to the (wife) full details of the proposed transaction(s) with documentary evidence in support".
He also undertook to pay the mortgage instalments and for essential repairs and maintenance for the Property whilst the wife lived there.
The wife has continued living in the Property pursuant to the 2009 order which gave her the right to live there until payment by the husband of the lump sum or until the sale of the Property "in the case of default in payment of" the lump sum.
The order records the wife's agreement to withdraw her application for a restriction against 67 KR and to remove a restriction registered against the Property. The wife did this but registered another restriction against the Property on 9 th June 2011 based on her having a: "Beneficial interest in the proceeds of sale pursuant to orders made in divorce proceedings and subsequent enforcement". The details given are as follows: "(The husband) is in default under orders that have been made for money to be paid to (the wife) and the court has directed that in default (the Property) is to be sold and the proceeds paid to (the Wife) …".
There were a number of further orders in 2010, 2011 and 2012 dealing with the implementation of the 2009 order. They did not change any substantive elements of the order save, as referred to above, the extension of time for payment of the final instalment of the lump sum. On 25 th March 2011 the husband was ordered to provide details of all properties in which he had an interest and of all outstanding mortgages and other information relating to his assets. Despite a further order on 20 th September 2011, the husband never complied with this obligation.
On 23 rd November 2010 the court made a further order for sale in respect of 67 KR. After payment of mortgages and costs of sale, the outstanding lump sum instalment was to be paid to the wife. This order contains the following recital:
"The (Second Appellant) … has confirmed that she will fully co-operate in the sale and will not seek to assert any claim against 67 KR such as would defeat the (wife's) claim".
This order has never been implemented.
On 18 th March 2011 bankruptcy proceedings were commenced against the husband.
Directions as to evidence were given by the family court on 25 th March 2011 and 20 th September 2011.
As referred to above, on 9 th June 2011 the wife registered a restriction against the Property.
The husband was made bankrupt on 2 nd March 2012. A bankruptcy order was also made against the Second...
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