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(Court of Appeal, Longmore; Wilson and Lawrence Collins LJJ; 19 December 2008)
The matrimonial home was vested in the husband's sole name, subject to a small mortgage. Shortly after the husband left the home, the wife registered notice of her matrimonial home rights under Family Law Act 1996, ss 30-33. Without the wife's knowledge, the property was sold to third parties who were aware of the wife's rights and who intended, with the husband, to defeat those rights. The husband's mortgage was paid off; the balance of the purchase price went to the husband. The third parties took out a much larger mortgage, and the bank registered its charge on the property. The wife applied for an order forbidding the husband from dealing with the proceeds of sale, for an order setting aside the sale and, eventually, for an order setting aside the bank's charge. The judge decided that the sale had been a reviewable disposition under Matrimonial Causes Act 1973, s 37(2) and that both the sale and the charge should be set aside. The bank objected, but judge nevertheless ordered the bank to vacate its land registry entry, on the basis that the husband would give the bank the balance of the purchase price, and would execute a new charge of the same size as his original mortgage. The bank's appeal was allowed on the basis that the bank charge could not be set aside. It was acknowledged that the bank had had notice of the wife's home rights.
The husband had not been a party to the bank's charge, and the bank was not a party to the wife's financial relief proceedings against the husband. Therefore the bank charge was not a reviewable disposition under s 37(1). Even if the charge had been a reviewable disposition, the bank would have had a good defence to the claim that it should be set aside, in that the bank had acted in good faith; the fact that the bank had had notice of the wife's rights did not meant that the bank was on notice of the husband's intention to defeat the wife's claim for financial relief. The further question arose whether the court could set aside a disposition made subsequent to the reviewable disposition under s 37(3), and the answer was that although s 37(3) could be invoked to do so if, for example, all those concerned had been conspiring to defeat the wife's rights, it could not be invoked to defeat this charge, as the bank had not been a party to the conspiracy in this case.
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