Bishop v Bishop

When a consent order depends on future events, it should be construed and implemented in accordance with its original spirit and the parties’ and court’s intention when it was made. The court should avoid creating a different substantive result by relying on fictional assumptions about later events. Where an order defines net sale proceeds by deducting the mortgage and sale expenses, the deductions ordinarily reflect the amounts actually outstanding or incurred when the sale takes place. A mortgage discharged before sale by endowment policy proceeds is therefore no longer deductible.

A consent order made on the breakdown of a marriage required the sale of the matrimonial home and defined the net proceeds of sale. The husband died before the sale, and endowment policies discharged the mortgage. The property was later sold at a substantially increased price.

The district judge accepted the wife’s construction of the order, but the circuit judge allowed the estate’s appeal. The wife sought permission for a further appeal under section 55 of the Access to Justice Act 1999. The central issues were whether permission should be granted and whether the mortgage deduction referred to the historic mortgage debt or the amount actually outstanding at sale.

Lord Justice Thorpe gave the leading reasons. Lord Justice Keene and Mr Justice Bennett agreed, and the decision was unanimous.

1. Permission to appeal. Permission was granted under section 55 of the Access to Justice Act 1999. A second appeal involving a point of law concerning construction, particularly where the judges below had reached conflicting conclusions, was more readily arguable than a challenge to the exercise of judicial discretion after two adverse decisions.
2. Construction of consent orders. Consent orders dependent on future events must be construed so that their implementation remains as close as possible to the intention of the parties and the court when the order was made. The court must distinguish implementation of the original order from an attempt to produce a different substantive result. The Court applied the approach stated by Oliver J in Thompson v Thompson [1955] 2 All ER 243 at 249.
3. Meaning of the deductions. The wording defining net proceeds required the figures generated by the eventual sale. Estate-agent charges and conveyancing costs could not sensibly be fixed at the date of the order. The same approach applied to the mortgage. The relevant deduction was the mortgage outstanding in the event, not a fictional historic liability.
4. Application and order. The endowment policies discharged the mortgage before sale. That event removed the mortgage deduction from the calculation of net proceeds. The circuit judge’s criticism that the district judge had varied the order was rejected. The appeal was allowed, the district judge’s order was reinstated, and the respondent was ordered to pay the appellant’s costs of the appeal.

• Court of Appeal (Civil Division): Permission granted and appeal allowed; the district judge’s order was reinstated: [2004] EWCA Civ 738.
• Telford County Court, circuit judge: On 13 October 2003, the estate’s appeal from the district judge was allowed.
• Telford County Court, District Judge Dickinson: Judgment dated 29 July 2003 accepted the wife’s construction of the consent order.