Derhalli v Derhalli

A consent financial remedy order is construed as a contract endorsed and given legal effect by the court. Its meaning depends on the natural and ordinary language, the order read as a whole, its purpose, the relevant background known to the parties, and commercial common sense, excluding subjective intentions.

Where an order requires the immediate sale of a former matrimonial home, provides for shared sale conduct and allocates its outgoings to the occupying spouse, those provisions may establish a right to remain in occupation until sale. The court should not assume that the legal owner has superior occupation rights where the order’s overall scheme is to sell the property and divide the proceeds.

The appeal concerned a consent financial remedy order made in divorce proceedings. It required the immediate sale of the former matrimonial home, allocated responsibility for its outgoings, and provided for payments to the appellant from the sale proceeds.

The appellant remained living in the home with the parties’ daughters after the respondent moved elsewhere. The County Court held that she was a gratuitous licensee whose licence could be terminated on reasonable notice, after which she would be liable for use and occupation. The central issue was whether the order entitled her to remain until the home was sold.

1. The appeal was allowed. The County Court had misinterpreted the consent order and had wrongly concluded that the appellant was a gratuitous licensee liable to pay for use and occupation after reasonable notice.
2. A consent order may be construed as a contract between the parties, endorsed and given further legal effect by the court. The relevant approach, reflected in Arnold v Britton [2015] AC 1619 and Chartbrook Ltd v Persimmon Home Ltd [2009] 1 AC 1101, requires consideration of the natural and ordinary meaning, the order’s other provisions, its overall purpose, the relevant background known or assumed by the parties, and commercial common sense, while excluding subjective intentions.
3. The order had to be read in its factual context. The home was to be sold immediately, the parties had joint conduct of the sale, the appellant had been living there with the daughters, and the respondent had established alternative accommodation. It was implicit that the appellant would vacate to permit completion with vacant possession, but the order strongly indicated that she could remain until that point.
4. Clauses 23 and 21 supported that conclusion. The notice requirement for the respondent’s attendance recognised the primacy of the appellant’s residential occupation, while the detailed allocation of the home’s outgoings contemplated a continuing arrangement until sale. Clauses 12 and 26 also left no obvious room for a later claim for rent or adjustment of the agreed settlement.
5. The County Court placed excessive weight on the respondent’s beneficial ownership and the removal of home-rights notices. Before and after the order, until decree absolute, the appellant had statutory home rights under section 33 of the Family Law Act 1996. Her post-order rights depended on the proper construction of the whole consent order, not on an assumption that the respondent had superior occupation rights.
6. Negotiating correspondence was inadmissible as an aid to construing the consent order. Narandas-Girdhar v Bradstock [2016] EWCA Civ 88 concerned a different situation involving an amended instrument, where a deleted clause could in principle assist in construing the document as modified. That exception did not apply here.

• High Court (Chancery Division): Allowed the appeal against the County Court’s order of 3 May 2019, which had held that the appellant was a gratuitous licensee terminable on reasonable notice and liable for use and occupation.