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Family Law

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04 AUG 2015

Birch v Birch [2015] EWCA Civ 833

Birch v Birch [2015] EWCA Civ 833
(Court of Appeal, Gross, Kitchin, McCombe LJJ, 31 July 2015)

Financial remedies – Consent order –Undertaking to discharge husband from mortgage obligations – Wife sought to vary undertakings under s 31 of the Matrimonial Causes Act 1973

The appeal was dismissed and the Court of Appeal held that while a formal jurisdiction to vary the undertaking given in financial remedy proceedings did exist, where the variation sought wan an attempt to substitute an entirely different outcome, the exercise of the jurisdiction should be limited.

In financial remedy proceedings concluded in 2010 the consent order recited an agreement between the parties as to the future ownership of certain personal belongings. Each party undertook to discharge identified debts and it was agreed that the husband would have no legal or beneficial interest in the former matrimonial home.

The wife undertook to discharge the mortgage on the property and to release the husband from any liability in relation to it. If he was not released from the mortgage the property would be sold.

In 2011 the wife gave notice of her intention to apply under s 31 of the Matrimonial Causes Act 1973 to vary the undertaking to secure the release of the husband from the mortgage/ She now sought for him to be released from the mortgage or for the property to be sold once the youngest child, who was now 13, reached 18.

In 2014 the district judge found that the court did not have jurisdiction to vary the undertaking in such a way and dismissed the application. Permission the appeal was refused. A further appeal was dismissed but permission to appeal to the Court of Appeal on the issue of jurisdiction only was granted.

The court found that this was not a case involving an ancillary order under s 24A of the Act. As a matter of form the undertakings were not such orders. It could also not be argued that the undertakings were something that the court would or could have ordered under s 24A.

The undertakings were part and parcel of a comprehensive consent order resolving the parties' financial affairs without which the other orders would not have been made. The variation proposed would undermine the substratum of the final order.

There did exist a formal jurisdiction to vary the undertaking but when the variation sought was in effect an attempt to substitute an entirely different outcome from that provided for by the original order, the scope for the exercise of the jurisdiction must be extremely limited. In this instance there was no basis upon which the court would exercise the jurisdiction in the present case.

The appeal was dismissed.

Neutral Citation Number: [2015] EWCA Civ 833

Case No: B6/2014/1760

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
His Honour Judge Waller CBE
The Family Court at Watford

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 31/07/2015
Before :

LORD JUSTICE GROSS
LORD JUSTICE KITCHIN
and
LORD JUSTICE McCOMBE

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Between :

ALICEA HELEN BIRCH
Appellant
- and -

JAMES WILLIAM HAMILTON BIRCH
Respondent

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Stephen Hockman QC and Jane Campbell (instructed by Alison Fielden & Co.) for the Appellant
Paul Infield and Julia Shillingford (instructed through the Bar Pro Bono Unit) for the Respondent

Hearing date: 23 June 2015

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Judgment
Lord Justice McCombe:

(A) Introduction

[1]  This is an appeal by Mrs. Alicea Birch (“the Wife”) from the order of 12 May 2014 of His Honour Judge Waller CBE, made in the Family Court at Watford, whereby he dismissed the Wife’s appeal from the order of District Judge Chesterfield, made on the hearing of a preliminary issue in relation to the Wife’s application for a variation of the terms of an undertaking given by her to the court in a financial order (“the Order”) made by consent in divorce proceedings on 26 July 2010. The divorce proceedings were between the Wife and her (now) former husband, the Respondent (“the Husband”). The decree absolute of divorce was made on 14 October 2010.

[2]  The Order, after defining certain terms to be used in it, recited agreement between the parties as to future ownership of certain personal belongings and the contents of the former matrimonial home. There followed undertakings by each as to the discharge by one or other of them of identified debts. It also recited (somewhat in contradiction of the later provision in clause 1 of the curial part of the order) the agreement by the Husband that,

“…he has no legal or beneficial interest in [the former matrimonial home]”.

[3]  The order then recorded, in paragraph 4, the following undertakings to the court by the wife:

“ ... 4.3 to discharge all mortgage interest payments due in respect of the mortgage in favour of Cheltenham & Gloucester plc secured upon the former matrimonial home and to use her best endeavours to obtain the consent of the mortgagee to the release of James William Hamilton Birch from any liability in respect of the mortgage, but in any event to indemnify James William Hamilton Birch in respect of the above;
4.4 in any event to ensure that if the said James William Hamilton Birch is not released from the mortgage by 30 September 2012 she will secure the release of James William Hamilton Birch on 30.9.12 by placing the former matrimonial home upon the market for sale to redeem the mortgage with Cheltenham & Gloucester plc at a price to be agreed between the parties and in default of agreement to be valued by a valuer appointed by the Royal Institute of chartered Surveyors.”

[4]  The curial part of the Order then provided as follows:

“1. The Respondent shall transfer to the Petitioner within 28 days from the date of Decree Absolute herein all his legal estate and beneficial interest with full title guarantee in the freehold property Formosa, Chapel Lane, Naphill, Buckinghamshire registered at the Land Registry under Title Number BN331259 [i.e. the former matrimonial home] subject to the mortgage secured thereon in favour of Cheltenham & Gloucester plc. ...
4. Upon completion of the transfer of Formosa, Chapel Lane, Naphill, Buckinghamshire provided by Clause 1 of this Order and compliance by the Petitioner and the Respondent with their respective undertakings to the Court provided for by recitals 4 and 5 of this Order and upon the making of a final decree herein, the Husband’s and the Wife’s claims for financial provision, pension sharing and property adjustment orders do stand dismissed and neither the Husband nor the Wife shall be entitled to make any further application in relation to their marriage under the Matrimonial Causes Act 1973 s23(1)(a) or (b) or to make an application to the court, on the death of the other, for provision out of his or her estate.
...
6. Liberty to apply as to timing and implementation.”

[5]  By “Notice of Intention to Proceed with an Application for a Financial Order”, issued on 18 November 2011, the Wife gave notice of her intention to apply to vary the undertakings given by her in the Order in the following terms:

“ Application under Section 31 Matrimonial Causes Act 1973 to Vary the Undertaking given by the Applicant to secure the release of the Respondent from the mortgage on the former matrimonial home by 30th September 2012 or for the property to be sold in default. The Undertaking to be varied so that the Respondent to be released from the mortgage or for the property to be sold in default when the youngest child attains the age of 18 years or either child completes full time education.”

[6]  Although we do not have the previous court orders before us, it appears that directions were given for the determination of whether the court had any jurisdiction to consider such an application as proposed by the Wife. It was that issue which came before District Judge Chesterfield on 15 January 2014. The District Judge found that the court did not have jurisdiction and dismissed the application. Permission to appeal was refused. The Wife sought permission to appeal against the District Judge’s order. The application came before Judge Waller on 12 May 2014. He granted permission to appeal but dismissed the appeal. Permission to bring a second appeal to this court, against Judge Waller’s order, on the issue of jurisdiction only, was granted by Lord Justice Treacy on 22 October 2014.

[7]  The only remaining background facts of significance for the present appeal are (1) that the parties have two children a daughter (born on 16 February 2000, now 15) and a son (born on 15 August 2001, now 13); (2) that the wife has been unable to procure the husband’s release from his obligations under the mortgage; and (3) that the transfer of the former home to the Wife has not yet been effected.

(B) The statutory provisions: Matrimonial Causes Act 1973

[8]  The relevant statutory provisions are to be found in sections, 21(2), 24(1)(a), 24A, 25, 25A(1) and 31(2)(f) and (7) of the Matrimonial Causes Act 1973. The relevant parts of those sections are these:

“21. Financial provision and property adjustment orders.
... (2) The property adjustment orders for the purposes of this Act are the orders dealing with property rights available (subject to the provisions of this Act) under section 24 below for the purpose of adjusting the financial position of the parties to a marriage and any children of the family on or after the grant of a decree of divorce, nullity of marriage or judicial separation, that is to say-

(a) any order under subsection (1)(a) of that section for a transfer of property; …”

“24. Property adjustment orders in connections with divorce proceedings etc.
“(1) On granting a decree of divorce,…or at any time thereafter (whether in the case of a decree of divorce…before or after the decree is made absolute), the court may make any one or more of the following orders, that is to say –

(a) an order that a party to the marriage shall transfer to the other party… such property as may be…specified, being property to which the first-mentioned party is entitled, either in possession or in reversion...
(c) an order varying for the benefit of the parties to the marriage and of the children of the family or either or any of them any ante-nuptial or post-nuptial settlement (including such a settlement made by will or codicil) made on the parties to the marriage;
(d) an order extinguishing or reducing the interest of either of the parties to the marriage under any such settlement.”

(Subsection (1)(c) and (d) are included, not because they are of direct relevance to the present case but because they were important to the decision of this court in Omielan v Omielan [1996] 2 FLR 306 which has played an important part in the arguments both here and in the court below.)

“24A Orders for sale of property
“(1) Where the court makes an order under section…24 of this Act a secured periodical payments order, an order for the payment of a lump sum or a property adjustment order, then, on making the order or at any time thereafter, the court may make a further order for the sale of such property as may be specified in the order, being property in which or in the proceeds of sale of which either or both of the parties to the marriage has or have a beneficial interest, either in possession or in reversion…”
(3) Where an order is made under subsection (1) above on or after the grant of a decree of divorce…the order shall not take effect unless the decree has been made absolute.
(4) Where an order is made under subsection (1) above, the court may direct that the order or, or such provision thereof as the court may specify shall not take effect until the occurrence of an event specified by the court or the expiration of a period so specified…”

“25. Matters to which court is to have regard in deciding how to exercise its powers under ss 24 and 24A”
“(1) It shall be the duty of the court in deciding whether to exercise its powers under section 23, 24, 24A, 24B and 24E above and, if so, in what manner, to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.
(2) As regards the exercise of the powers of the court under section 23(1)(a), (b) or (c), 24, 24A, 24B and 24E above in relation to a party to the marriage, the court shall in particular have regard to the following matters –

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take4 steps to acquire;
(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
(c) the standard of living enjoyed by the family before the breakdown of the marriage;
(d) the age of each party to the marriage and the duration of the marriage;
(e) any physical or mental disability of either of the parties to the marriage;
(f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
(g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;
(h) in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

(3) As regards the exercise of the power of the court under section 23(1)(d), (e) or (f), (2) or (4), 24 or 24A above in relation to a child of the family, the court shall in particular have regard to the following matters-

(a) the financial needs of the child;
(b) the income, earning capacity (if any), property and other financial resources of the child;
(c) any physical or mental disability of the child;
(d) the manner in which he was being and in which the parties to the marriage expected him to be educated or trained;
(e) the considerations mentioned in relation to the parties to the marriage in paragraphs (a), (b), (c) and (e) of subsection (2) above.”

“25A Exercise of Court’s powers in favour of party to marriage on decree of divorce of nullity of marriage
(1) Where on or after the grant of a decree of divorce or nullity of marriage the court decides to exercise its powers under section 23(1)(a), (b) or (c), 24. 24A, 24B or 24E above in favour of a party to the marriage, it shall be the duty of the court to consider whether it would be appropriate so to exercise those powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree as the court considers just and reasonable.”

31. Variation, discharge, etc., of certain orders for financial relief.
(1) Where the court has made an order to which this section and of section 28(1AA) above, applies, then, subject to the provisions of this section, the court shall have power to vary or discharge the order or to suspend any provisions thereof temporarily and to revive the operation of any provisions so suspended.
(2) This section applies to the following orders, that is to say-

(a) any order for maintenance pending suit and any interim order for maintenance;
(b) any periodical payments order;
(c) any secured periodical payments order;
(d) any order made by virtue of section 23(3)(c) or 27(7)(b) above provision for payment of a lump sum by instalments;
(dd) any deferred order made by virtue of section 23(1)(c) (lump sums) which includes provision made by virtue of-

(i) section 25B(4), or
(ii) section 25C,

(provision in respect of pension rights)
(e) any order for a settlement of property under section 24(1)(b) or for a variation of settlement under section 24(1)(c) or (d) above, being an order made on or after the grant of a decree of judicial separation.
(f) any order made under section 24A(1) above for the sale of property
(f) a pension sharing order under section 24B above which is made at a time before the decree has been made absolute.


(4) The court shall not exercise the powers conferred by this section in relation to an order for a settlement under section 24(1)(b) or for a variation of settlement under section 24(1)(c) or (d) above except on an application made in proceedings-

(a) for the rescission of the decree of judicial separation by reference to which the order was made, or
(b) for the dissolution of the marriage in question.


(7) In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, first consideration being given to the welfare which a minor of any child of the family who has not attained the age of eighteen, and the circumstances of the case shall include any change in any of the matters to which the court was required to have regard when making the order to which the application relates.”

(C) Omielan v Omielan (supra)

[9]  The decision in this case has been central to the arguments of the parties (in their original and final forms) both here and below. Both the District Judge and Judge Waller held that the effect of this decision was to exclude jurisdiction to entertain the Wife’s application for a variation. The Wife, through Mr Hockman QC (who did not appear below), submits that they were wrong so to hold. It is, therefore, convenient to address that case at this stage.

[10]  In Omielan the parties were married in 1977 and separated in 1988. They had four children who, at the time of the decision in this court, were aged 17, 16, 13 and 10 years old. Care and control of all four children was given to the wife. A comprehensive financial settlement was made the subject of a consent order on 12 February 1990. Paragraph 1 of the order provided as follows:

“[The former matrimonial home] be sold but the sale thereof be postponed until such time as one of the following events occur:

(a) the remarriage of [the wife],
(b) [the wife’s] cohabitation with another man for a period of not less than 6 months,
(c) the death of [the wife],
(d) [the wife] ceasing to reside at the property on a full-time basis.”

Paragraph 3 was in these terms:

“Upon one of the events referred to in cl 1 one hereof occurring and upon the said sale as aforesaid taking place, the net proceeds of sale shall be divided between [the wife] and the children of the family … as to 25% to [the wife] and 75% to the said children to be held in trust for their benefit as to 40% for the said child [R] and 20% for each of the said children A, L and M.”

Paragraphs 4 and 5 provided for periodical payments for the wife and children. Paragraph 6 provided for liberty to apply as to implementation and paragraph 7 dealt with costs.

[11]  The decree of divorce was made absolute and the husband and the wife entered into a trust deed constituting themselves trustees of the former home in terms of the relevant provisions of the consent order. Prior to these events husband and wife had owned the home in equal shares.

[12]  By 1991 the wife had been in cohabitation with a new partner by whom she had given birth to a fifth child. In November 1992 a residence order was made by consent transferring the residence of the two eldest children to the husband. On 4 May 1994 the husband applied for an order for the sale of the former home pursuant to paragraph 1 of the consent order. On 20 January 1995 the wife applied under section 31 of the 1973 Act for a variation of the consent order to postpone the sale until the youngest child should attain 18 years or cease full time education. The husband argued that the court had no power to entertain an application to vary a section 24 order. The judge in the county court held that he did have power to entertain the application but gave leave to the husband to appeal against that decision. The appeal was argued before Butler-Sloss LJ (as she then was), Peter Gibson and Thorpe LJJ. The principal judgment was given by Thorpe LJ, with whom Butler-Sloss and Peter Gibson LJJ agreed.

[13]  The husband argued that the consent order was a final disposal of the ancillary relief claims of the parties, even though it did not contain conventional paragraphs stating that its provisions were conclusive of all capital claims. The order was a property adjustment order, more specifically an order for the variation of settlement order under section 24(1)(c) and (d) of the Act; as such it was not within the category of orders which the court had jurisdiction to vary under section 31. For the wife, it was argued that paragraph 1 of the consent order was an order for sale under section 24A and was accordingly one which the court had power to vary under section 31(2)(f). In the alternative, the husband submitted that any part of the order that was made under section 24A was procedural and any consequential power to vary had to be confined to procedural variation; thus, once an event had occurred terminating vested beneficial interests in possession then a jurisdiction that was confined to procedural variation had terminated with it.

[14]  Thorpe LJ focussed upon the features of the order in that case which led him to conclude that its effect was to vary a settlement and/or to extinguish/reduce the interest of party under a settlement, i.e. by varying/extinguishing interests under the former statutory trusts for sale under which they were beneficial tenants in common in equal shares: section 24(1)(c) and (d). He then said this:

“Section 31 as originally enacted provided in its first subsection for a power to vary or discharge or suspend or revive certain orders which are then defined in s.31(2). The classes of orders that fall within s.31(2) are in summary maintenance pending suit, periodical payments, secured periodical payments, lump sums, but only settlement or property or variation of settlement orders after the grant of a decree of judicial separation. However, to this list the Matrimonial Homes and Property Act 1981 added: (f) any order made under section 24A(1) above for the sale of property.”

[15]  In the next part of his judgment Thorpe LJ turned to review a number of the cases in which (in summary) it has been held that,

“If the conclusion is that what was intended was a final and conclusive once-for-all financial settlement, either overall or in relation to a particular property, then it must follow that that precludes any further claim to relief in relation to that property.” (See per Lord Oliver of Aylmerton in Dinch v Dinch (1987) 8 FLR Part 2 162, 173.)

(I shall return a little later to these and similar cases and their bearing upon the present matter.)

[16]  Thorpe LJ continued:

“Mr Spon-Smith observes that Thompson and Taylor define the extent of s.24A and not the extent of s31(2)(f). But that observation does not deprive them of relevance to the decision in this appeal. Obviously a litigant cannot escape the jurisdictional limitations of s.24A by submitting that the current application is brought under s.31(2)(f), a section introduced into the statue by contemporaneous amendment and for the sole purpose of enabling the court to make variation or orders under s.24A. The limitation on s.31(2)(f) cannot be less than the limitations upon s.24A.”

He then rejected the primary submission for the husband namely that the order properly construed amounted to no more that an order made under s.24(1)(c) and (d) and thus was not within any category of order which the court had jurisdiction to vary under s.31, (see pp. 311-2) but he said (a little lower down on page 312),

“Thus properly construed the order of 12 February 1990 constituted a variation of settlement order under s. 24(1)(c) and (d) to which was attached an ancillary order under s.24A.”

There then follows the crux of the judgment in the next paragraph which I quote in full:

“However, on the second issue as to whether s.31(2)(f) gives the court jurisdiction to entertain the wife’s application of 20 January 1995 I find myself unhesitatingly in favour of Mr Blair’s alternative submission. First s.31(2)(f) must be construed within the statutory context, namely that when post-divorce capital adjustments have been incorporated in a final order, whether or not by consent, the court has no jurisdiction to revisit the territory, in the absence of an element that might vitiate any court order such as fraud, misrepresentation, or material non-disclosure. This cardinal principle was strongly maintained by Lord Oliver in both Thompson and Dinch. The financial arrangement in Dinch was broadly similar to that in the present case. Because it was made prior to 1 October 1981 it was expressed to be a s.24 order supported by a s.17 order. Had it been made 12 months later it would properly have been drawn under the Matrimonial Causes Act 1973 alone, since s.24A was then available to support s.24. It is manifest to me that the considerations that dictated the conclusion in Dinch should equally dictate the conclusion in the present appeal. The same pointer is to be derived from both Thompson and Taylor. Section 24A is a purely procedural section inserted into the statute to clarify or expand the court’s power of implementation and enforcement. Any power to vary such procedural enactment must be construed to be equally limited to matters of enforcement, implementation and procedure. In other words s.31(2)(f) gives the court jurisdiction to revisit the territory of the ancillary order under s.24A but not the territory of the primary order under s.24 which it supports. Applying that principle to this case, manifestly the application of 20 January 1995 seeks to revisit the territory of the primary order under s.24. Mr Spon-Smith’s submission that the application seeks only to extend the date of implementation of sale is erroneous. Property analysed, the wife’s election to cohabit with Mr O’Hagan for more than 6 months in and after 1992 had the effect in law of determining her beneficial interest in possession and of bringing from reversion into possession the beneficial interests of herself and the children in the proceeds for future sale. The application of 20 January 1995 seeks to reverse the termination of a beneficial interest in possession to the detriment of the holders of vested beneficial interests in reversion. These vested beneficial interests in possession and in reversion are that the very core of the s.24 order since they were the interests created to replace the pre-existing joint beneficial ownership of the husband and the wife. Both statute and authority show that the court has no jurisdiction to entertain an application to vary such an order. For those reasons I would allow the appeal and dismiss the wife’s application of 20 January 1995 for want of jurisdiction.”

(D) The basis on which the decisions below were reached

[17]  Judge Waller records in paragraphs 38-39 and 53 of his judgment that it was accepted by the Wife before him (as it had been before the District Judge) that if her application was treated as an application under section 31(2)(f), or for a variation of an order under section 24A, the court would not have jurisdiction to deal with it. At paragraph 39 he said,

“…Miss Campbell accepts, as in my judgment she must, that the effect of what Mrs Birch is seeking to achieve, is to alter the nature of the original order. In my judgment, that is, as I say, an inevitable conclusion and concession on the part of Mrs Birch, because of the way in which the order is framed.”

At paragraph 42 of the judgment, the judge continued,

“42. The change in the order which Mrs. Birch seeks is a substantial one. She seeks not simply a postponement to allow further time to secure Mr Birch’s release, but a change which would mean that the property would not have to be sold until Thomas reached the age of 18 years. That was never part of the original proposal, there is nothing in the order to suggest that the age of either of the children was to be a consideration in determining the date of sale, and so if this had been expressed as an order for sale, in my judgment a variation would have been precluded by the case of Omielan. As I say, that much was accepted, at any rate before the District Judge.”

[18]  In his judgment, District Judge Chesterfield said that the application was “in effect” an attempt to turn the consent order from what it is, into rather a different type of property adjustment order. He said (although no doubt not precisely so) that it would become more like a Mesher order (see Mesher v Mesher (1973) [1980] 1 All ER 126n).

[19]  In the court below, the argument for the Wife was that the undertakings in this case were not section 24A orders at all and the application was not (however it had been framed in the Wife’s application notice) an application for the variation of an order under section 31, but rather an application to vary an undertaking, to which a more general discretion applied: see Mid Suffolk DC v Clarke [2006] EWCA 71 and Kensington Housing Trust v Oliver (1997) 30 HLR 608.

[20]  Judge Waller held that it was artificial to attempt to draw a distinction between the criteria which apply upon variation of an order for sale from those which apply in seeking to vary the undertaking in the circumstances of this case. He held there was no real difference. He decided that the District Judge had been correct to apply what he had seen to be the decision in Omielan that there was no power in the court to vary the undertaking in the manner sought.

(E) The arguments in this court

[21]  Before us Mr Hockman QC for the Wife sought to withdraw from the concessions made before both judges below, to which I have referred above. As those concessions had been purely ones of law, Mr Infield for the Husband (who equally did not appear below) rightly did not resist that course.

[22]  Mr Hockman’s argument was that the undertaking given in paragraph 4.4 of the Order (for the sale of the property) (which he submitted was ancillary to the undertaking in paragraph 4.3 to endeavour to secure the Husband’s release from the mortgage covenants and for indemnity) was in reality an order for sale under section 24A of the Act to which the power of variation under section 31(1) and (2)(f) applied without qualification. The court had a power to order a variation under these provisions and, in doing so, (in due course, when hearing the application on the merits) would have to give “first consideration” to the welfare of the minor children, pursuant to section 31(7). So far as necessary, he would wish to submit to the judge that there had been a substantial change in circumstances of the parties since the consent order which compelled the variation which was now sought. The variation that the Wife would now seek would be in these terms:

“That the period for compliance with para, 4.4 of the undertakings be extended until the earliest of the following, namely the date upon which the Appellant is able to re-mortgage the property in her sole name; or the date on which Tom reaches the age of 18; or further order in the meantime.”

[23]  Mr Hockman submitted that Omielan could be distinguished in the following manner. The variation in that case sought to revise vested beneficial interests which had been acquired by the children upon the occurring of the triggering event (the wife’s cohabitation with a new partner for 6 months or more). Thus, the conferment of beneficial interests upon the children and the reduction of the interests of the former spouses (in the case of the husband the extinguishment of his interest), as achieved by the original order, would be undermined. The variation of the settlement/the extinguishment of interests made by the earlier order did not amount to an order of the type amenable to the section 31 jurisdiction. Here, by contrast, the variation sought would have no effect upon the beneficial interests; the Husband would remain bound by the order to transfer the property to the Wife and nothing in that would change; only the period for postponement of sale of the property, in default of compliance with the paragraph 4.3 undertaking, would alter.

[24]  Mr Infield for the Husband argues that this argument ignores the substance of the consent order in this case. It was designed as a final settlement of the parties’ financial claims one upon the other, and the transfer order and the undertakings in paragraphs 4.3 and 4.4 were all part and parcel of the overall financial order. The variation now sought would be to convert the order made into a property adjustment order of an entirely different type. In the words of Thorpe LJ in Omielan it would “revisit…the territory of the primary order under s.24…” and not merely the “territory” of the ancillary undertakings for sale. It would strike at the “very core” of the primary section 24 order.

[25]  It was not suggested to us by either party that the type of contingent order for sale envisaged by the paragraph 4.4 undertaking in this case would not have been within the power of the court under section 24A(4) at all.

(F) My Conclusions

[26]  It is clear to me that, for many years, in the exercise of their jurisdiction in divorce, the courts have been astute to achieve finality in determining the financial (and in particular the capital) claims of the parties to a marriage. As Thorpe LJ said in Omielan, when capital adjustments have been incorporated in a final order, whether or not by consent, the court has no jurisdiction to “revisit the territory” of those adjustments, in the absence of a vitiating factor such as fraud, misrepresentation or material non-disclosure. He describes it as a “cardinal principle” emerging from cases such as Dinch v Dinch (supra), to which might be added De Lasala v De Lasala [1980] AC 546 and Barder v Calouri [1988] AC 20.

[27]  To these considerations, as Thorpe LJ also remarked, we must have regard to the statutory context, which makes it clear that a primary property adjustment order under section 24(1)(a) and a lump sum order under section 23(1)(c) are not subject to the section 31 jurisdiction, save (in respect of the latter) a lump sum payable by instalments: section 31(2)(d). The principal function of section 31 is to permit variations of periodical payments and the like. It is also clear, as explained in Omielan, that section 24A is a purely procedural section limited to matters of enforcement, implementation and procedure in respect of any order to which a section 24A order for sale is attached.

[28]  My view is that the undertakings in this case do not aid the enforcement, implementation or procedure of the primary order for the transfer of the property to the Wife in any respect. The property transfer order, as a matter of construction, enforcement and implementation, is independent of and separate from the undertaking for ultimate sale. The transfer order could be enforced and implemented (even if, as a matter of practicality, the transfer would have to be subject to the mortgage) without recourse to the undertakings which would remain live whether the section 24 order had been implemented or not.

[29]  It was not argued before us that the court in this case could not/should not have made an order for sale under section 24A in such circumstances as an adjunct to or fall back from the provision in paragraph 4.3. However, it is clear to me that the 1973 Act contains no power that would have made it possible for the court to make any order, analogous to the paragraph 4.3 undertaking, requiring as it does a party to endeavour to secure the release of the other party from mortgage covenants and to indemnify him from liability under them. Accordingly I do not consider that an order under section 24A could have been made in this case in terms of the undertaking in paragraph 4.4 following a failure to comply with the undertaking in paragraph 4.3.

[30]  Of course, even if there was no such power, it is a recognised process of consent orders of this type to make arrangements, by way of undertakings by one or more of the parties, for matters outside the powers of the court under the 1973 Act. Such undertakings are “enforceable as effectively as direct orders”: see per Lord Brandon of Oakbrook in Livesey v Jenkins [1985] AC 424 at 444F-H. The undertakings are an essential part of the bricks and mortar with which the edifice of such financial orders are constructed.

[31]  It was, therefore, undoubtedly within the power of the court to extract and/or accept such undertakings as these, without which the order for property transfer would not be made. In the present case, it is clear beyond peradventure that this property order in favour of the Wife would not have been made absent the undertakings now in issue. It is not suggested that an order in a form incorporating the proposed variation was a realistic possibility when the parties were before the court for the final hearing, during the course of which the essential terms of the consent order were negotiated.

[32]  In the end, applying these considerations and the court’s decision in Omielan (which, while binding upon us, is obviously, however, distinguishable on its facts) the question for me was whether this proposed variation was the equivalent of a section 24A order at all. If it was, did it revisit the “territory” of post-divorce capital adjustments incorporated in a final order, and the “territory” of the final order under section 24 (so as to fall outside the jurisdiction under section 31), or was it merely in the “territory” of an ancillary order under section 24A. If it was not the equivalent of an order under section 24A, would there be jurisdiction, which might sensibly be exercised, to vary this undertaking as now sought.

[33]  As already indicated, in my judgment, this is not a case involving an ancillary order under section 24A of the Act at all. Indeed, as a matter of form, the undertakings are not such orders, although it was convenient for Mr Hockman is his attractive, but perhaps deceptively simple, argument so to submit.

[34]  I do not accept, as I have said, that these undertakings are to be regarded as merely incorporating by way of undertaking something that the court would or could have ordered under section 24A. Clearly, paragraph 4.3 could not have been so ordered, with paragraph 4.4 as the fall back if the Wife could not achieve the objective of paragraph 4.3. In my judgment, the undertaking in paragraph 4.4 is not, therefore, an undertaking equivalent to a section 24A order.

[35]  I consider, therefore, that in truth the Wife’s submission before the judges in the court below was correct on this point. The application before them was an application simply to vary an undertaking contained in a final order.

[36]  That situation was considered by Munby J (as he then was) in L v L [2008] FLR 26 in which a husband sought to set aside a consent order in its entirety and, in the alternative, sought a variation of periodical payments under section 31. The claim to set aside the order as a whole failed, but the husband was held entitled to proceed with the application to vary the periodical payments under section 31.

[37]  Munby J summarised the circumstances in which a final ancillary order can be reviewed as follows (at p.41):

“[34] The circumstances in which a final ancillary relief order that has been made by consent can be reviewed by the court have been surveyed by Bracewell J in Benson v Benson (Deceased) [1996] 1 FLR 692 and, more recently, in S v S (Ancillary Relief: Consent Order) [2002] EWHC 223 (Fam), [2003] Fam 1, [2002] 1 FLR 992. I need not repeat the exercise. It is enough for present purposes to identify those circumstances. In the list that follows the labels are descriptive rather than definitive and should be treated as such. The situations which may trigger such a review are:

(i) if there has been fraud or mistake: de Lasala v de Lasala;
(ii) if there has been material non-disclosure: Livesey (formerly Jenkins) v Jenkins;
(iii) if there has been a new event since the making of the order which invalidates the basis, or fundamental assumption, upon which the order was made: Barder v Caluori [1988] AC 20, [1987] 2 FLR 480;
(iv) if and insofar as the order contains undertakings: Mid Suffolk District Council v Clarke [2006] EWCA Civ 71, [2006] All ER (D) 190 (Feb);
(v) if the terms of the order remain executory: Thwaite v Thwaite [1982] Fam 1, (1981) 2 FLR 280 and Potter v Potter [1990] 2 FLR 27.

There is, in addition, the statutory jurisdiction under s.31 of the 1973 Act to vary discharge or suspend certain types of order, including in particular, and so far as is material for present purposes, any periodical payments order: see s.31(2)(b).”

[38]  There followed extensive consideration by the judge of the primary question in the case of whether the receipt by one party of bad legal advice could ever be a ground for revisiting an order. It was held that it could not. Munby J then turned (at [60]) to the argument as to whether an undertaking or an order which remained “executory” might be modified, varied or not enforced; he found (at [62]) that the principles in each case were the same. The judge concluded with this paragraph (at [67]):

“[67] Merely because an order is still executory the court does not have, any more than it has in relation to an undertaking, any general and unfettered power to adjust a final order – let alone a final consent order – merely because it thinks it is just to do so. The essence of the jurisdiction is that it is just to do so – it would be inequitable not to do so – because of or in light of some significant change in the circumstances since the order was made. Whether it is enough that there should have been a ‘significant change of circumstances’, to adopt the phrase used by Buxton LJ in Mid Suffolk District council v Clarke, or whether, as Bracewell J seems to have assumed in Benson v Benson (Deceased), it is necessary to meet the more stringent test in Barder v Caluori; namely, that there has been a new event since the making of the order was made, is a refinement which there is no need for me to explore here.”

Unlike in L v L, however, in the present case it seems to me that it is necessary to explore the refinement.

[39]  The undertakings now sought to be varied were part and parcel of a comprehensive consent order resolving the parties’ financial affairs on divorce, without which the other orders (including the substantive transfer of property order) would not have been made. Without the various undertakings there would have been no property transfer order at all. The variation now proposed would undermine the substratum of the final order made with the consent of the parties and the approval of the court. In my judgment, it is just that type of variation, against which the highest courts have set their faces in the cases (such as Dinch v Dinch) to which I have referred, unless, as Munby J said, the new event “…invalidates the basis or fundamental assumption upon which the order was made…”. However, it seems clear to me as Munby J said the jurisdiction to vary the undertakings must technically exist, even if rarely to be exercised. This may particularly be so in family proceedings when agreed financial arrangements derive their effect from the order itself (as approved by the Court) and not from the underlying agreement between the parties: see e.g. per Lord Brandon in Barder v Caluori (supra) at p.40E and the cases therein cited.

[40]  On what is known to us, it seems to me that the order was framed in a manner to enable the wife to explore, within a limited period, the possibility of securing the Husband’s release from the mortgage covenants, but with a long stop date of 30 September 2012. It might be that the court would have entertained an application for a limited extension of time if it appeared that such release was close to fulfilment. However, an extension departing from that fundamental purpose of the order would have been a very different matter.

[41]  If, contrary to the view that I have expressed, I had thought that the undertaking in paragraph 4.4 was the equivalent of an order under section 24A, I would still have taken the view that the variation sought would “revisit the territory of the primary order under section 24”. I reach this conclusion for much the same reasons as stated in paragraph 39 above about the proposed variation in the context of an application to vary an ordinary undertaking. The variation seeks to undermine the substratum of the final order made. In my view, it would be artificial to say that a variation of the undertaking would leave the terms of the property transfer order unaffected and, therefore, all that was affected was the undertaking alone.

[42]  In Omielan, Thorpe LJ was careful to use the word “territory” of an order, not “terms” of an order. It may be that a variation of the undertaking would leave unaffected the terms of paragraph 1 of the order, but it would clearly undermine its territory because no such order would have been made without the undertaking in the form in which it was given.

[43]  Neither in the written arguments submitted in the lead up to the hearing of the appeal nor at the hearing itself was our attention drawn to the provisions of rule 4.1(6) of the Family Proceedings Rules 2010 (in force from April 2011), which provides as follows:

“A power of the court under these rules to make an order includes a power to vary or revoke the order”.

This provision mirrors the provision in civil proceedings to be found in CPR rule 3.1(7). As no submissions were addressed to us on the question of whether the introduction of this rule had any impact on the matter which we have to decide, I do not intend to say a great deal about it. It appears to me that the rule in this form makes clear that there is a power to vary any order made pursuant to a power “under these rules”, it does not seem to me to provide any help as to the situations in which the power (if applicable) is likely to be exercised in any particular type of case (matrimonial or otherwise) that may be before the court. I would not wish it to be thought, however, that this judgment has been written in ignorance of or in disregard for either FPR rule 4.1(6) or the following cases: Roult v NW Strategic Health Authority [2009] EWCA Civ 444, TF v PJ [2014] EWHC 1780 (Fam) (Mostyn J) and CS v ACS & anor. [2015] EWHC 1005 (Fam) (Munby P). For my part, I do not consider that the rule or these cases affect the conclusions that I have reached.

[44]  On the basis that I have sought to explain, it seems to me that there does exist a formal jurisdiction in the court to vary this undertaking. However, when the variation sought is, in effect, an attempt to substitute an entirely different outcome from that provided for by the original consent order, the scope for the exercise of the jurisdiction must be extremely limited indeed. While I recognise the existence of the jurisdiction to vary the undertaking, on what we have been told as to the basis of the proposed variation application, I can see no basis upon which the court would exercise the jurisdiction in the present case. In the circumstances, I consider that we should invite further submissions in writing from counsel as to whether the realities dictate that the right course is to dismiss the appeal.

Lord Justice Kitchin:

[45]  I agree.

Lord Justice Gross:

[46]  I also agree and add only a very few observations of my own.

[47]  I confess to some doubts that the undertaking in paragraph 4.4 was not the equivalent of an order under s. 24A. That said, I am not, with respect, minded to disagree with McCombe LJ’s reasoning in this regard. Moreover, it is to be noted that McCombe LJ’s conclusion would have been unaffected had he come to the view that the undertaking was the equivalent of a s.24A order: see, [41] above.

[48]  Turning to the disposal of this appeal, I have been very troubled by the delay which has ensued since November 2011. Furthermore, finality in this sphere of the law (as elsewhere) is a most important consideration. I regard it as unreal to suppose that the comprehensive consent order of 26th July 2010 could or would have been obtained had anything like the variation now contended for by the wife then been ventilated. As it seems to me, the variation sought would, years later, fundamentally undermine that consent order. Having regard to the nature of the variation sought, on the material before us and even assuming there to be jurisdiction to do so, it strikes me as wholly unrealistic to suppose that the jurisdiction would be exercised to vary the undertakings in question. If that be right, then we would be doing all concerned - and the administration of justice - a disservice by remitting the matter for yet further consideration. Accordingly, I entirely agree with McCombe LJ’s observations in this connection at [39] – [42] and his conclusion at [44] above.

Addendum

[49]  In the light of these judgments, which were submitted to the parties in draft, it was agreed that the appeal should be dismissed and the court ordered accordingly.
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