In a recently published judgement, an unnamed husband was ordered to pay just under £8.5 million to complete the purchase of a property.
The man’s wife had applied for a so-called ‘interlocutory injunction’ requiring her husband to pay the money, plus interest and legal fees. Such orders are made during ongoing court proceedings and require the named person to do or not do certain things.
The former couple were in the midst of financial remedy proceedings during their divorce. Nevertheless, the wife’s claim was not made key divorce legislation the Matrimonial Causes Act 1973, but instead under the Civil Procedure Rules 1998. As the name suggests, the latter defines procedure for making civil claims. The wife claimed that the matter was enforceable under trust and contract law but the husband disputed this.
The couple married in 1997 and their relationship eventually broke down in 2011. The wife filed for divorce in December of that year and they reached the penultimate decree nisi stage the following July.
Financial settlement proceedings began in April 2013. At the time, the wife and the couple’s children were still living in the former matrimonial home, a substantial property worth approximately £55 million. The husband announced that he wished to sell this property and the wife agreed, provided he financed the purchase of a new home for her. He indicated that he would do and in due the course the wife made an offer on a London property worth £16.7 million. Following correspondence between the husband and wife’s solicitors, she offered £16.25 million and the purchase proceeded towards completion.
In the High Court, Mr Justice Moylan noted that the husband’s conveyancing solicitors told the husband’s solicitors that the sum of £8.49 million was required to complete the sale. The mortgage was to be taken out in the wife’s name but guaranteed by the husband and the offer she had received had an expiry date two weeks in the future.
However, the husband did not proceed with payment of the sum required because of continuing disagreements regarding the couple’s financial settlement as a whole. The dispute centred on the provision of financial security for the lump sum to be paid by the husband in order to secure the new property. The wife insisted that this was non-negotiable but the husband countered that he was unsure he would be able to pay it and feared that, as a result, she would try to renege on the whole agreement.
The property agreement and the overall settlement were “inextricably linked” he argued. “I fail to see how one can complete without the other being resolved.”
Asked to address the husband’s concerns, the wife said she accepted that the property arrangement was a binding Xydhias agreement. A Xydhias agreement is an outline agreement reached during the course of proceedings which is still considered valid despite being incomplete.
Consequently, the Judge concluded:
“Are the husband’s concerns about the wife seeking to “undo” the agreement, as expressed in correspondence and in his statement, valid? In my view they are not, because the wife clearly acknowledges that she is bound by the terms of the Xydhias agreement and cannot seek to withdraw from it in the event of the parties being unable to agree the form in which security should be provided.”
The husband’s legal team argued that there was no legally valid method for the wife to enforce the property payment, and insisted that the payment was essentially just one element of the couple’s financial remedy proceedings.
But Mr Justice Moylan disagreed. The agreement made between the husband and wife was “separate and distinct” to the financial remedy proceedings as a whole, he concluded.
If purchase of the property did not complete, the deposit already would be forfeited. But, the Judge declared:
“…if completion takes place, there will be an asset which has been purchased for just under £11 million. It will provide the security which, currently, a property in Central London appears to provide. It is accepted that it is only part of the wife’s claims. I do not see that the husband will suffer any financial prejudice or injustice, at all, if I make the order sought by the wife.”
The judgement is available to read here.