Real property – Possession – Matrimonial home – Financial remedy order – Court making consent order in financial remedy proceedings following breakdown of marriage – Appellant husband seeking possession of property – Court determining as preliminary issue that, on true construction of order, respondent wife permitted to remain living in matrimonial home, rent-free, until sold – Appellant appealing – Whether court erring in law – Appeal dismissed
In 2004, 5 St Mary’s Place, London, was purchased in the sole name of the appellant husband as a family home. The parties lived there with their two children until after the breakdown of the marriage. In 2014, the appellant moved out and rented another property. The respondent wife and their children remained in the property until it was sold in March 2019.
Following an acrimonious divorce, a financial remedy order was made by consent in 2016 providing for the immediate sale of the house, which took longer to sell than expected. In May 2019, the appellant brought proceedings for possession and for the payment of mesne profits or damages for use and occupation of the house at the rate of £5,000 per week.
A preliminary issue arose whether, on its true construction, the consent order permitted the respondent to live in the house until it was sold and to pay the outgoings but no rent. The judge found that from the date of the order the respondent occupied the house as a gratuitous licensee liable to pay damages for use and occupation until she vacated the property.
The respondent’s appeal against that decision was allowed on the grounds that the first instance judge had erred in his interpretation of the order which led to the conclusion that the respondent was a gratuitous licensee: [2019] EWHC 3286 (Ch).
The appellant appealed contending, among other things, that the appeal judge had wrongly set a precedent for implying into every financial remedy order, where the property was to be sold, an implied licence for the party in occupation to remain until sale, irrespective of the legal ownership of the property or the absence of words granting such a licence.
Held: The appeal was dismissed.
(1) The court agreed with the judge that there was no factual foundation for saying that the respondent was granted a licence, and that she became a trespasser upon the granting of decree absolute and liable to pay damages. The solution to this case did not essentially lie in an examination of the legal ownership of the property and whether the respondent was in law a gratuitous occupier, but upon a conventional construction of the order assessed in the light of its natural and ordinary meaning, any other relevant provisions, its overall purpose, the facts and circumstances known or assumed by the parties at the time the order was executed and commercial common sense, but disregarding subjective evidence of the party’s intentions. However, the fact that the appellant was the sole beneficial owner of the property, and that the respondent recognised that to be so within the order, was part of the background and an aid to the interpretation of the order: Arnold v Britton [2015] EGLR 53, Chartbrook Ltd v Persimmon Homes Ltd [2009] 3 EGLR 119 and Wood v Capital Insurances Ltd [2017] AC 1173 followed.
The factors outlined by the judge, such as the joint conduct of the sale, the agreement that the appellant would give 24 hours’ notice before attending the property and the transfer of all the standing orders for the running costs of the house to the respondent, were all relevant terms of the order which shed light on the intentions of the parties and favoured the judge’s interpretation of the order.
(2) The terms of the order did not undermine the judge’s conclusions. The court had to consider what a reasonable person, with the background knowledge available to the parties, would have understood the contract to mean. That included the fact that the order was made in financial remedy proceedings which had been approved by the judge, who would, before approving the order, have considered all the circumstances of the case. Such a consideration would have been conducted against the backdrop of the matrimonial jurisprudence and the proper approach of the courts to the legal interests in a matrimonial home.
The respondent’s case had never been argued on the basis of an implied term but proceeded throughout on the basis of analysing the true purpose and effect of the order, and there was no hint in his judgment that the judge reached his decision based on an implied term. Given that no term could be implied into a contract if it contradicted an express term, it logically followed that, until the express terms of a contract had been construed, it was, at least normally, not sensibly possible to decide whether a further term should be implied: Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] EGLR 8 considered.
Unless the judge had erred in the interpretation of the order, it was not necessary for him to move on to consider whether he could properly imply a right of occupation as a term of the contract.
(3) The order built in every possible protection to prevent either party varying the lump sum and, therefore, the distribution of wealth which had been agreed between the parties. The appellant’s interpretation of the order would undermine that clear intention by reducing the lump sum payable to the respondent by a very significant sum as she had no other means to satisfy the appellant’s demand for rent. The judge rightly concluded that the consent order did not leave space for a further dispute about money or rights in relation to the properties, and properly took into account both the fact that the matrimonial home was in the sole name of the appellant and that the respondent agreed to withdraw the matrimonial homes notices on the property. The judge in an unimpeachable judgment had applied the law correctly and was entitled to conclude that the effect of the parties’ agreement was that the respondent was entitled to stay in occupation of the matrimonial home until the house was sold.
Michael Glaser QC and Emily Betts (instructed by Farrer & Co LLP) appeared for the appellant; Nigel Dyer QC and Nathaniel Duckworth (instructed by Charles Russell Speechlys LLP) appeared for the respondent.
Eileen O’Grady, barrister
