SR v HR & Ors (Rev 1)

A court of first instance has no power to vary or discharge a final capital order, except within the limited statutory power concerning a lump sum payable by instalments or on recognised set-aside grounds. A liberty to apply clause and the fact that an order remains executory do not permit the court to rewrite the substantive order. The principle in Thwaite v Thwaite must be approached cautiously and does not create such a power. Mere delay in implementing a property adjustment order is not a ground for setting it aside. An order made after bankruptcy cannot transfer value from property already vested in the trustee in bankruptcy.

By consent, the Family Court had made substantive property adjustment orders concerning three properties. The orders were not implemented promptly. The lower court treated them as executory and replaced them with a new order which materially altered the economic division of the parties’ property.

The husband appealed. After the new order was made, he had been adjudged bankrupt, and his trustee in bankruptcy intervened in support of the appeal. The central issues were whether the lower court had jurisdiction to replace the final capital orders and whether the husband still owned property capable of being redistributed when the replacement order was made.

1. Appeal allowed. The replacement orders made on 4 October 2017 and amended on 20 October 2017 were set aside as made without jurisdiction.
2. Section 31 of the Matrimonial Causes Act 1973 confines the power to vary or discharge capital orders. Apart from a lump sum payable by instalments, and a set-aside on recognised grounds, a final capital award cannot be varied or discharged by a first-instance court. An order for sale under section 24A may be varied, but that does not permit alteration of the underlying capital award.
3. A liberty to apply clause, or the fact that an order remains executory and has not yet been fully implemented, does not authorise the court to substitute a different capital order. The reasoning in Thwaite v Thwaite was not authority for that proposition. Mullins v Howell and Purcell v F. C. Trigell Ltd concerned control of interlocutory orders and provided scant support for rewriting a final order. Any application relying on the principle in Thwaite v Thwaite should therefore be approached extremely cautiously.
4. A set-aside application under rule 9.9A and paragraph 13 of PD9A is available for recognised grounds including fraud, material non-disclosure, limited categories of mistake, and a subsequent unforeseen and unforeseeable event which invalidates the basis of the order. Mere delay in implementation cannot constitute such a ground.
5. The lower court’s replacement order was also defective because, when it was made, the husband was bankrupt and his property had vested in the trustee in bankruptcy. The original substantive orders therefore revived. The husband’s reasonable disbursements of £866 were awarded, and the wife was ordered to pay the trustee’s assessed costs of £10,000, payable from the retained sale proceeds. Those costs were also ordered to be an expense of the bankruptcy.

• High Court (Family Division) — On appeal, Mr Justice Mostyn allowed the appeal and set aside the replacement orders.
• Family Court at Swansea — HH Judge Sharpe replaced the earlier substantive property adjustment orders with a new order, treating them as executory and at the edge of effective implementation.