Interim orders for the sale of property by Lesley Smythe

It has been a long-standing principal of family law legislation that the courts cannot usually make an order for the sale of a property until proceedings have concluded. However, it is becoming increasingly common for lawyers to conclude that particular cases might benefit from such ‘interim’ orders. Here are some examples:

1. Where the matrimonial home is the principal asset and contains a significant amount of equity, it may well be apparent that the property has to be sold from the beginning of the proceedings. If a sale is achieved at an early stage then it will crystallise the funds available for distribution which is always a huge benefit in such cases. It provides certainty and the parties are then left to argue over the percentage division. Another potential benefit may be to draw into focus the issues and lead to an earlier conclusion. In real terms, the couple will be able to see what funds they have available to rehouse and also what the real impact of an increase in legal costs is on a finite pot. The result may be an impetus on both sides to move on in what is a scary time for divorcing parties, considering their longer-term future.
2. Where the couple own more than one In recent times, it has been popular for people to invest in ‘buy to let’ properties. If one has significant equity then an interim order for sale could be useful to release some capital, either to enable legal fees to be met or indeed to contribute towards day-to-day living expenses. A second home may prevent or adversely impact on subsequent mortgage applications which may be crucial for rehousing. If a property is sold then it may negate this problem.
3. A third possible scenario could be on in which a property has a significant mortgage attached to it and the resultant monthly payments are very high. If an interim order for sale is made then it may free up much needed income to meet income needs on a month-to-month basis while the case is progressing.

In today’s financially uncertain world, there will be other examples of situations in which an interim order for the sale of property could be appropriate.

So where does the law stand?

Presently two of the most senior family Judges – Mr Justice Mostyn and Mr Justice Cobb – are at odds on this issue, with recent decisions illustrating their opposing positions.

Before we consider the cases in question, it may be worthwhile looking at current legislation.

Divorcing couples are on the whole governed by the Matrimonial Causes Act 1973 (MCA), which sets out the law and the powers of the Court. But there is provision within the Family Proceedings Rules 1996 – Rule 20 – for interim orders for sale to be made in very specific situations. These are incredibly limited – for example, when dealing with orders requiring one party to pay the other’s legal fees – and this can cause frustration to one party, especially in scenarios outlined above.

So what other legislation can people turn to for assistance?

The Married Women’s Property Act 1882 (MWPA) and the Trust of Land and Appointment of Trustees Act 1996 (TOLATA) may help. Usually where people are engaged or cohabiting, a specific application can be made under one of these. It may complicate the procedure for divorcing couples when they may be within financial proceedings governed by the MCA, but then have to make a different or separate application under one of these other statutes.

Two immediate disadvantages spring to mind: namely the cost of a second set of proceedings, together with the fact that MWPA and TOLATA do not give the Courts discretionary powers when dealing with cases. This may mean that people face a choice of getting a swift decision and an early adjudication on whether an interim order for sale should be made, but with possibly a less favourable outcome.

Recent cases

Let us now look at the recent cases and the position of the two Judges. In one corner is Mr Justice Cobb. He is firmly of the view that there is no power to make an interim order for sale of a property. We see this in his recent decision and commentary in the case of WS v HS [2018] EWFC11, where he allowed a wife’s appeal against such an order.

This case involved a long marriage (25 years). The husband had left the former matrimonial home. While engaged in voluntary disclosure both the parties had said the former matrimonial home should be sold. It was marketed for two years and an offer was made by prospective purchasers. The husband wanted to accept it but the wife did not. The husband applied for financial relief and at the same time he applied for an interim order for sale. This was granted by a District Judge, despite the wife’s opposition. The wife stated that the sale should wait until the youngest child had completed their secondary education and that the sale price was a significant undervalue. The District Judge was against her and she appealed.

Judge Cobb agreed with the wife. The main reason for his decision was the fact Sections 24 and 24 of the MCA specifically prohibit interim orders for sale being made.

In his reasons, the Judge made reference to an earlier decision by Mr Justice Mostyn in BR v VT [2015] (more of which below) when an interim order for sale was made. In that case Judge Mostyn took the view that such orders can be made when consideration is given to restricting a person’s right to occupy the family home using different legislative powers – e.g. the Family Law Act 1996 (FLA). Judge Cobb, however, held that not only did the MCA not allow an interim order for sale, but also that he would have ‘grave misgivings’ about terminating this wife’s right to occupy the property. Even when looking at occupational rights (see Section 33 of the Family Law Act 1996), the Court can only prohibit, suspend or restrict – i.e. it does not remove a wife’s legal right to make use of the property. He therefore allowed the wife’s appeal.

Judge Mostyn has slightly differing views.

In the case mentioned above, BR v VT [2015] EWHC 2727 (Fam), the husband had not applied for an order for an interim sale because the former matrimonial home was in his sole name, but he instead sought orders terminating the wife’s right of occupation and an order giving possession of the vacant property.

Judge Mostyn is clearly aware of Section 24 of the MCA prohibiting interim orders for sale, but he also looks at the interpretation of other legislation and has made orders which, in effect, result in an actual interim order for sale. However, he approaches the case from the point of view that interim orders cannot be made without being satisfied that a spouse’s right of occupation should be terminated – under Section 33 of the Family Law Act 1996. This case involved the accumulation of significant debts that would have been catastrophic for the family given the insolvency proceedings which would have followed. So Judge Mostyn made the Orders sought by the husband.

Then, on 28 March 2018, we again saw Judge Mostyn grapple with the issue of interim orders for sale, in the appeal of SR v HR [2018] EWHC 606 Fam. In his ruling, he makes reference to the disagreements between himself and Judge Cobb but “firmly and respectfully maintains [my] view”. He concludes by saying that orders for sale are essentially procedural and … [of]… itself do not hold …proprietary rights”. Thus, an order for sale can be made facilitating a sale but not changing the percentage ownership or how such proceeds are later to be divided. His view is that the issue needs to be resolved by a higher Court, and until that happens, applications for interim orders for sale should be made under the MWPA1882.

The future

When dealing with cases where an interim order for sale may seem the best way forward, both clients and solicitors have to start to think outside the box. Proceedings under the MCA may start to be replaced by presently less common applications under the MWPA or TOLATA if it is in the client’s best interests to pursue an early order for the sale of a property. Another possibility which we may also start to see are two sets of different proceedings running at the same time , where clients issue a MWPA application to secure an order for sale within already existing MCA proceedings.