Matrimonial Causes Act 1973, section 24–Adjustment of property between spouses in a case in which wife had remarried and had a home elsewhere–Court decides against straight 50 per cent approach despite substantial contributions of wife–A matrimonial home is not in a true sense a mere capital asset
This was an
appeal by Mrs Marianna Lee (formerly Mentel) from a decision of Dunn J on
February 19 1975 transfering to her former husband, Henryk Mentel, her interest
in the matrimonial home, 33 Western Road, Plaistow, London E13, on payment by
him of £1,750.
G Stephens
(instructed by Gersten & Co) appeared for the appellant, and J Hamilton
(instructed by Winstanley Burgess, agents for Dawson & Co) represented the
respondent.
Giving the
first judgment, ROSKILL LJ said that the parties were married in April 1961,
when the husband was 28 and the wife 19. At the beginning of the marriage the
couple lived with the wife’s parents and both were earning. They managed over a
comparatively short period of time to save a substantial sum, of the order of
£2,000 to £3,000. Their purpose was to acquire a home. In 1963 they acquired
the house which was the subject of the dispute, the £3,600 purchase price being
provided as to £1,600 from their joint savings and as to £2,000 on mortgage,
repayment amounts being £14.53 per month. Unhappily the marriage did not last
long. Dunn J had referred to increasing tension between the parties from 1966
to 1968. Ultimately the appellant met a Mr Lee. She left Mr Mentel in 1968, marrying
Mr Lee after divorce proceedings. Mr Lee had become a member of the
metropolitan police, and as a result had secure employment and the benefit of a
police house, which one assumed would remain his for the foreseeable future. Mr
Mentel was still living in the former matrimonial home, to which the appellant
had contributed. She had apparently put up £800, that was to say half the
down-payment of £1,600, and had also made payments towards the mortgage
interest out of her own earnings while she was still living with the respondent
in the early years. Between 1966 and 1968 she did not contribute towards the
mortgage interest, though Dunn J accepted that she contributed an amount by way
of paying for food and other household necessities.
The court was
told that at the time of the hearing before Dunn J the value of the house was
something over £9,300. At that time there remained owing about £1,650 on the
original mortgage. On these figures the equity was of the order of £7,700. Mr
Mentel, who from the middle 60s onwards had paid the whole of the mortgage
interest and principal himself, had paid off up to the time of the trial
£1,423, and counsel had told the court that between that time and the hearing
of the appeal he had paid a further £130. The appellant originally took
proceedings under section 17 of the Married Women’s Property Act. It was not
disputed that for the purpose of proceedings under that section her share of
the interest in the former matrimonial home was 50 per cent, subject to
crediting the respondent with interest payments made since 1966. The court was
not, however, concerned with section 17 proceedings, because the respondent
started proceedings under section 24 of the Matrimonial Causes Act 1973. Dunn J
made an order transferring the appellant’s interest in the house to Mr Mentel
upon payment by him of £1,750. The appellant contended that that was not
sufficient. There was no cross-appeal by Mr Mentel, and it was therefore
accepted on his behalf that that payment at least would have to be made. The
short question was how the court should make a property adjustment order under
section 24.
The right way
to approach this question was to start by asking what the assets of this couple
were at the time the marriage broke up. What property had they got? The only property each had was a one-half
interest in this house, subject to the mortgage. But, as had been said in the
Court of Appeal recently, it was all very well in these cases to talk about the
matrimonial home as if it were a capital asset. In actual practice, anything
less realisable than a matrimonial home was difficult to imagine. True, it
consisted of bricks and mortar. But once the home was realised on the break-up
of a marriage, one person anyhow had to be re-housed, so that one was in no
true sense realising a capital asset. How was the house to be dealt with? Was it sufficient that the respondent should
be expected to accept the additional burden enabling him to buy out the
appellant’s interest for £1,750, or should she have a larger cash payment in
return for her share, causing him to accept a much bigger burden?
He (his
Lordship) doubted whether the court derived much help from other cases. Mr
Hamilton, for the respondent, had helpfully taken the court through section 25
of the 1973 Act. The respondent was undoubtedly worse off in the matrimonial
home than he had been: he was having to pay the whole of the mortgage interest,
whereas while the
the house for his home. From her point of view, she had been freed from the
burden of contributing towards the house; on the other hand, she had lost the
benefit of her original capital contribution of £800 assuming that the £1,600
came from them jointly, and she had lost the benefit of her original
contributions. On the other side of the scale she had re-married, and
re-married a man in a secure occupation with a police house for which no rent
was being paid. She had been re-housed without having to make any contribution towards
that re-housing.
As always in
these cases, there were factors which had to be taken into account on both
sides. Had the wife not re-married, the respondent would have been hard put to
it to resist an order for a particular provision, and indeed the house would
probably have had to be sold to realise the requisite cash payment to the wife.
But that was not the position. If the appellant had a full half share made over
to her, or its equivalent in terms of cash, she would be getting half the value
of the house at a time when she had the benefit of a completely new home
rent-free as the result of her re-marriage. The respondent was less favourably
placed. In the end the court had to do what was just to put the parties in the
financial position in which they would have been if the marriage had not broken
down and each had properly discharged financial obligations towards the other.
In his (Roskill LJ’s) judgment it would not be right in this case to say that
the appellant should have anything approaching a full one-half interest.
Whether or not the court would, had it heard her case at first instance, have
awarded her rather more than £1,750, there was great force in Mr Hamilton’s
argument that if the figure were substantially raised by requiring the respondent
to borrow a much larger capital sum, he would be asked in terms of mortgage
interest and repayment of capital to accept an unfair burden. He (his Lordship)
had reached the conclusion that the judge’s figure was one with which the court
should not interfere, and he would dismiss the appeal.
Agreeing,
ORMROD LJ said that the court under section 24 was making what was called a
property adjustment order. That, in his judgment, was a very apt description of
the nature of the order to be made. The court was involved in adjusting the
property rights of the spouses to take account of the new situation following
on the dissolution of the marriage. The court was dealing with homes and not
with capital assets in any realistic sense of that word. It was impossible to
talk about shares being worth £3,000 or more without being wholly unrealistic.
Moreover, income consequences had to be borne very much in mind. There was no
doubt that if the respondent had to raise a substantial amount to pay off the
appellant the income effect on him would be very considerable. It had been
estimated that instead of paying £14 a month he would have to pay £40 to £50 a
month. The right approach was to look at the situation of both parties, apply
all the items set out in the subsections of section 25, and at the end of the
day arrive at a figure which was just in the broadest sense.
Also agreeing,
STAMP LJ said that, regarding the interests of the parties in the house as
capital assets, it would seem right that the appellant should receive one-half
the value of the equity. But he was not satisfied that this was the correct
approach. The truth of the matter was that it was impossible to regard this
house as a realisable asset in the hands of the respondent. It was now costing
him more than would have been the case had the wife continued to pay a share of
the mortgage instalments. To require him to increase the mortgage in order to
buy out the full value of the wife’s equitable interest, or the greater part of
it, would place a heavy burden on Mr Mentel. He would be paying a second time
for the home merely because the marriage had broken down. On the other hand the
wife had a home and would have £1,750, which incidentally was more than twice
the amount of her contribution to the original purchase.
The appeal
was dismissed.
