Family: Undertakings and variations

While the Supreme Court’s decision in Birch v Birch [2017] UKSC 53 is ostensibly about the court’s power to vary undertakings, it provides useful broader guidance on the variation of family orders generally.

Background

The case concerned the wife’s application to vary undertakings contained in a consent order dated 28 July 2010.  The undertakings included provisions for her to discharge the mortgage payments on a property, indemnify the husband and use her best endeavours to release him from the covenants under the mortgage. Significantly, there was an undertaking from the wife that if the husband had not been released from the mortgage covenants by 30 September 2012, she would secure his release by selling the property. The wife applied to vary the last undertaking to postpone the trigger date to 15 August 2019, that being the date of the son’s 18th birthday.

On 31 July 2015, the Court of Appeal (reported as [2015] EWCA Civ 833) held that the court did have jurisdiction to vary an undertaking, even if the scope for its existence was ‘extremely limited indeed’. The court, however, held that there was no basis for it to exercise its powers in the present application. The wife appealed to the Supreme Court.

‘Varying’ undertakings

In giving the lead decision in the Supreme Court, Lord Wilson said there was a conceptual confusion which he needed to dispel: the court has no power to vary an undertaking.  By contrast, where a party wishes to cease being bound by their undertaking, they may apply to the court to be released from it, or for it to be discharged. Such application will be accompanied by an offer of a further undertaking in different terms. The court may therefore decide to accept the further undertaking and thereby grant the application to release.

In a similar vein, the court may indicate that it will grant the application for release only on the condition that the party is willing to give a further undertaking in terms different from those currently being offered by that party. Although the exercise of the court’s power may look like a variation of an undertaking, it is the product of a different process of reasoning – see Cutler v Wandsworth Stadium Limited [1945] 1 All ER 103.

When the court will exercise its power

Lord Wilson felt that the proceedings had been bedevilled by a failure to distinguish between the existence of the court’s jurisdiction to release the wife from her undertaking, and the circumstances in which it would exercise its jurisdiction.

By reference to civil case law, Lord Wilson stated that one would confidently conclude that there was a full jurisdiction to hear the wife’s application for release from her undertaking, although the exercise of that jurisdiction in her favour would be likely to attract lively debate. He noted that the Court of Appeal in the decision in Mid-Suffolk District Council v Clarke [2006] EWCA Civ 71 held that unless there had been a significant change of circumstances since the original undertaking was given, grounds for release from it seemed hard to conceive.

Variation of orders generally

Two issues were addressed by Lord Wilson: the courts’ general powers to vary orders under section 31 of the Matrimonial Causes Act 1973; and specifically the courts’ power to vary orders for sale made under section 24A(1) of the Matrimonial Causes Act 1973.

Looking at applications to vary generally, Lord Wilson noted the inclusion of section 31(7) of the Matrimonial Causes Act 1973. The provision provides: ‘In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of 18, and the circumstances of the case shall include any change in any of the matters to which the court was required to have regard when making the order to which the application relates…’

Lord Wilson stated that it was worthy of note that parliament did not in sub-section (7) or elsewhere in the Matrimonial Causes Act make a change of circumstances a condition for exercise of the jurisdiction to vary. Nevertheless, he continues, ‘unless there has been a significant change of circumstances since the order was made, grounds for variation of it under section 31 seem hard to conceive’.

In granting the wife’s appeal and confirming the court’s power to release her from her undertaking, Lord Wilson remitted the matter back to HHJ Waller to decide whether the jurisdiction should be exercised. Lord Wilson directed that HHJ Waller would need to consider the following:

(a) He will give first consideration to the welfare of the two children, but that was a consideration which may be outweighed by other factors.

(b) He will have regard to all relevant circumstances including, in particular, whether the wife can establish a significant change of circumstances since her undertaking was given.

(c) Whether, and if so to what extent, the husband has suffered, and is likely to continue to suffer, prejudice by remaining liable under his mortgage covenants.

Varying orders under section 24a of the Matrimonial Causes Act

The wife’s undertaking to sell the property was found to be equivalent to an order for sale under section 24A. As such orders are variable under section 31(2)(f) of the Matrimonial Causes Act 1973, it followed that the court had the power to release the wife from her undertaking.

The fact the court has the power to vary an order for sale under section 24A is somewhat unusual as the majority of capital orders are not capable of variation under section 31. Lord Wilson carefully considered the Court of Appeal’s decision in Omielan v Omielan [1992] 2 FLR 306 in which Thorpe LJ held that section 24A was a purely procedural section inserted into the statute to clarify or expand the court’s power of implementation and enforcement. Accordingly, any power to vary such an order must be construed to be equally limited to matters of enforcement, implementation and procedure. He described this as not being able to revisit the ‘territory’ (or substance) of the original order.

Lord Wilson disagreed. He stated that where parliament has conferred jurisdiction on a court, he saw no scope for a court to say that a part of its power does not exist. He found the concept of different territories hard to apply in a financial order where the terms are interlinked.

Dissenting judgment of Lord Hughes

Lord Hughes’ dissension was in relation to the principles upon which the court would exercise its power to vary, rather than the existence of the courts’ power. He emphasised that orders of a capital nature cannot be varied in their substance. Although it was permissible to seek a variation to work out or enforce the original order, it was impermissible to vary it substantively. He described the distinction between the two as being the ‘acid test’. Somewhat unusually, Lord Wilson commented upon Lord Hughes’ views and stated that he could not subscribe to the ‘acid test’ articulated by Lord Hughes.