Le Foe v Le Foe and Another
| Jurisdiction | England & Wales |
| Judgment Date | 2001 |
| Year | 2001 |
| Date | 2001 |
| Court | Family Division |
Ancillary relief – Matrimonial home – Husband sole owner at law – Wife making substantial indirect contributions to mortgage – Building society holding charge over property – Husband defaulting in mortgage repayments – Whether wife having beneficial interest in former matrimonial home – Whether building society entitled to possession of property – Whether wife able to set aside charge – Matrimonial Causes Act 1973, s 37.
The husband and wife had been married for 40 years when they separated in November 1999. When the parties first married they lived in rented accommodation. In July 1971 two leasehold flats in Ashley Gardens, London, were purchased in the husband’s sole name for a total of £35,000. A mortgage was taken out in the sum of £15,000. The remaining £20,000 purchase money and the cost of renovating the flats to form one large home (the matrimonial home) derived from the proceeds of sale of a commercial property owned by the husband. At the time both husband and wife were working. The court found that although the husband earned more than the wife, the family economy depended for its function on the wife’s earnings. A second charge was taken on the matrimonial home by a company owned by the husband. The wife knew of and consented to that charge. In 1983 a £170,000 repayment mortgage was taken from Halifax and secured on the matrimonial home. A proportion of that amount was used to pay tax debts and the rest used to discharge the first and second charges on the matrimonial home. When the repayments of the Halifax loan were not kept up, another charge was taken from TSB in 1991 in order to pay some of the mortgage interest and provide for living expenses. In 1995 the wife inherited a flat on her mother’s death which she subsequently sold for £170,000. The money was used to pay off, inter alia, the TSB debt and the accumulated Halifax interest. Between 1995 and 1999 the wife made substantial contributions from her inheritance to pay, inter alia, mortgage arrears and future payments. In 1999, the husband stripped the majority of the equity out of the matrimonial home in order to leave the wife for a much younger woman. He completed an application form for a mortgage in the sum of £750,000 addressed to the Woolwich, deceitfully stating that he had separated from his wife. He later told Woolwich that he had lived apart from his wife for 20 years and that he was the only occupier of the matrimonial home. Both statements were untrue. When the Woolwich valuer came to inspect the property, the wife did not introduce herself. The husband used the amount to repay the Halifax mortgage and used the balance to purchase a further property,
31 Craven Street, subject to another mortgage of £1,009,999. Subsequently, the husband fell into arrears with the repayments and a suspended possession order was obtained. On 25 November 1999, the husband left the wife and presented a petition for divorce untruthfully alleging five years separation. He subsequently stopped paying the Woolwich mortgage. The wife presented a cross-petition for judicial separation and ancillary relief. During the proceedings, the wife applied for an order under s 37 of the Matrimonial Causes Act 1973 to set aside the charge granted by the husband in favour of the Woolwich over the former matrimonial home. Furthermore, Woolwich, as an intervener, claimed, inter alia, possession of the property.
Held – (1) Where there was no positive evidence of an express agreement between the parties as to how the equity in a property was to be shared, and where the court had fallen back on inferring the parties’ common intention from the course of their conduct, it would only be exceptionally that conduct other than direct contributions to the purchase price, either in cash to the deposit, or by contribution to the mortgage instalments, would suffice to draw the necessary inference of a common intention to share the equity. Where, as in the instant case, property was bought with the aid of a mortgage the court had to assess each of the parties’ respective contributions in a broad sense in order to determine the nature of the interests: nevertheless, the court was only entitled to look at the financial contributions or their real or substantial equivalent to the acquisition of the house. In the instant case, by virtue of the indirect contributions to the mortgage, the court was entitled to infer that the parties commonly intended that the wife should have a beneficial interest in the former matrimonial home. The proportion of the beneficial interest involved the examination of the whole course of dealings between the parties relevant to their ownership and occupation of the property and their sharing of its burden and advantages. Taking into account the conduct of the parties in the instant case, and in particular the capital contributions made by the wife from 1995, the court was left in no doubt that they commonly intended that she should have a 50% share in the property; Burns v Burns [1984] 1 Ch 317 and Midland Bank v Cooke[1996] 1 FCR 442 applied.
(2) The mortgage money of £750,000 from the Woolwich was used in the first instance to repay the existing Halifax charge. Since the wife had consented to it, that charge had priority over her beneficial interest. She could not be put in a better position by virtue of her husband’s fraud than would have been the case had he not done what he had. Accordingly, Woolwich was entitled to recover proceeds equivalent to the Halifax debt from the sale of the matrimonial home and the remaining amount from the husband’s interest in 31 Craven Street; Equity & Law Homes Ltd v Prestidge[1992] 1 FCR 353 applied
(3) It was an established principle that where there was more than one intention for a disposition under s 37 Matrimonial Causes Act 1973, the intention to defeat did not have to be the predominant motive. It was enough if it played a substantial part in the intention as a whole. In the instant case, the husband’s intention was to strip out as much equity as he possibly could to
enable him to buy a new home to occupy his partner. Accordingly, the mortgage was executed in order to defeat his wife’s claim for ancillary relief. However, in order for the wife’s application to succeed she needed to show, pursuant to s 37(4) of the 1973 Act that Woolwich ought to be fixed with constructive notice of the husband’s intention to defeat the wife’s claim. The valuer was instructed by Woolwich to assess whether the property was of an appropriate value to secure the advance and suitable for letting. The existence of a spouse would not have been regarded as abnormal. At the time of the husband’s application his intentions were entirely secret, and no amount of reasonable inquiry by Woolwich would have revealed them. Therefore, Woolwich would not be fixed with constructive notice of the wife’s presence or the husband’s intention to defeat her claim. Accordingly, the application under s 37 would be refused; Kemmis v Kemmis [1988] 1 WLR 1307 applied.
(4) Applying the relevant principles, including the yardstick of equality, the court concluded that a division of assets in the ratio of 52:48 in favour of the wife was entirely fair. However, as a result of the actions of the husband in mortgaging the former matrimonial home, there was nearly a £300,000 deficit. Nevertheless, the court concluded that it would not be fair to require the husband to pay the wife a further £12,500 to achieve a division of assets in the same proportions as if his misconduct had not occurred; A v A (Duxbury calculations) [1999] 3 FCR 433 and White v White[2000] 3 FCR 555 applied.
Cases referred to in judgmentA v A (Duxbury calculations) [1999] 3 FCR 433, [1999] 2 FLR 969.
Barclays Bank plc v Hendricks[1996] 1 FCR 710, [1996] 1 FLR 258.
Burns v Burns [1984] 1 Ch 317, [1984] 1 All ER 244, [1984] 2 WLR 582, [1984] FLR 216, CA
Calderbank v Calderbank [1976] Fam 93, [1975] 3 All ER 333, [1975] 3 WLR 586, CA.
Duxbury v Duxbury [1992] Fam 62, [1990] 2 All ER 77, [1991] 3 WLR 639n, [1987] 1 FLR 7, CA.
Equity & Law Home Loans Ltd v Prestidge[1992] 1 FCR 353, [1992] 1 All ER 909, [1992] 1 WLR 137, [1992] 1 FLR 485, CA.
Gissing v Gissing [1971] AC 886, [1970] 2 All ER 780, [1970] 3 WLR 255, HL.
Grant v Edwards [1986] Ch 638, [1986] 2 All ER 426, [1986] 3 WLR 114, [1987] 1 FLR 87, CA.
Hunt v Luck [1902] 1 Ch 428, [1900–3] All ER Rep 295, CA; affg [1901] 1 Ch 45, Ch D.
Kemmis v Kemmis [1988] 1 WLR 1307, [1988] 2 FLR 223, CA.
Leadbeater v Leadbeater [1985] FLR 789, CA.
Lloyds Bank plc v Rosset [1991] 1 AC 107, [1990] 1 All ER 1111, [1990] 2 WLR 867, [1990] 2 FLR 155, HL.
Midland Bank plc v Cooke[1996] 1 FCR 442, [1995] 4 All ER 562, [1995] 2 FLR 915, CA.
Mullard v Mullard (1981) 3 FLR 330, CA.
Sherry v Sherry [1991] 1 FLR 307, CA.
TSB plc v Marshall [1998] 2 FLR 769, CC (Newport IoW).
Walker v Wilsher (1889) 23 QBD 335, CA.
White v White[2000] 3 FCR 555, [2001] 1 All ER 1, [2000] 3 WLR 1571, [2000] 2 FLR 981, HL.
Williams & Glyn’s Bank Ltd v Boland, Williams & Glyn’s Bank Ltd v Brown [1981] AC 487, [1980] 2 All ER 408, [1980] 3 WLR 138, HL.
ApplicationThe wife applied for ancillary relief and for an order under s 37 of the Matrimonial Causes Act 1973 to set aside a charge granted by the husband over the former matrimonial home in favour of the Woolwich Building Society, the intervener. The building society sought possession of the property. The facts are set out in the judgment.
W appeared in person.
Timothy Becker for H.
Gerald Wilson for Woolwich.
Cur adv vult
19 June 2001. The following judgment was delivered.
NICHOLAS MOSTYN QC.[1] Before the court are two distinct cases. First, there is an application for ancillary relief by Margaret Le Foe (W) made in judicial separation proceedings against Dominic Le Foe (H). Within the application for ancillary relief W applies for an order under s 37 of the Matrimonial Causes Act 1973 setting aside a charge granted by H in favour of...
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