Derhalli v Derhalli [2021] EWCA 112; [2021] PLSCS 26 concerned possession proceedings being used in a somewhat unusual situation. It does not set a precedent that there is an implied term that a party may remain in occupation of a matrimonial home pending sale but it may lead to parties being more specific as to the terms of such occupation.
The Derhallis were a wealthy divorcing couple who agreed to split their assets by the payment of lump sums. Their highly acrimonious financial remedy proceedings led to a consent order (the order) being drawn up. The order provided for many things, including the sale of the matrimonial home at 5 St Mary’s Place, London (the home).
It was silent as to the occupation of the home, but it did make provisions for its running costs, the removal of protective notices and the regulation of the husband’s attendance at the home. At the time the order was agreed it had been assumed that the home would be sold relatively briskly, but the Brexit referendum caused the luxury property market to stall. The wife remained in the home pending its sale, which took more than two and a half years and achieved a lesser sum than anticipated.
The husband contended that he was entitled to possession and damages for trespass of £600,000. He commenced possession proceedings. The first instance judge found in favour of the husband and made a declaration that the wife “occupied the home as a gratuitous licensee terminable on reasonable notice whereafter she would be a trespasser liable to pay damages for use and occupation thereof until delivering vacant possession”. This declaration was overturned by Fancourt J and a second appeal was launched. The Court of Appeal found Fancourt J’s decision unimpeachable.
At first instance the husband had relied heavily in interpreting the order on the fact that he was the sole legal and beneficial owner of the home. However, the Court of Appeal confirmed that the entitlement to the declaration sought did not essentially lie with examining the legal ownership of the home but upon examining the correct construction of the order.
The order had to be construed in accordance with Arnold v Britton [2015] EGLR 53 and, applying those principles, the effect of the agreement contained in the order was that the wife was entitled to stay in occupation of the home until such time as it was sold. Importantly, this case is not a precedent for asserting that there is an implied licence to occupy a matrimonial home until it is sold. Nevertheless, the Court of Appeal observed that practitioners are likely in future (perhaps in an excess of caution) to choose to be more specific as to the terms under which a party remains in occupation of a matrimonial home pending sale.
Whether this case was an inappropriate use of possession proceedings was not definitively determined. Although the proceedings had allowed the position to be explored, King LJ was of the clear view that a dispute as to the interpretation of a financial remedy order made following the breakdown of a marriage should have been put before the specialist Financial Remedy Court or a High Court judge of the Family Division. On this aspect, Lady Justice Asplin and Lord Justice Arnold reserved their positions.
Elizabeth Haggerty is a barrister at Lamb Chambers
