What is an interim order for sale and can I apply for one?
It is common for parties to a divorce to own property, be it the family home, investment properties and/or a holiday home. As part of an overall resolution (whether agreed between the parties or ordered by the court) it is often the case that a property is to be sold.
But can a property be sold at an interim stage, before a final settlement has been reached? The answer is that it depends on the circumstances.
Summary
In the recently reported case of RA v KS [2023] EWFC 102, our Gemma Irving and Amy Stone acted for a husband (H) who opposed his wife’s application for a jointly owned holiday home (known as ‘the barn’) to be sold part way through proceedings. The parties also jointly own another property referred to in the judgment as ‘the London property’. The court determined that it could not make the order sought by the wife (W), as it had no power to permanently terminate H’s rights to occupy the barn, which he had by virtue of being a beneficial owner of the property.
However, it seems that the position may well have been different had the property been in W’s sole name.
Should you find yourself in a position where it appears as though the only way to clear liabilities or meet legal fees is for a property to be sold to release some much needed liquidity, please do get in touch so that we can consider the options available to you.
Judgment
The judgment of Recorder Allen KC in RA v KS provides a concise summary of the case law on interim orders for sale. For those that are interested, this is set out below.
In the case of BR v VT [2015] EWHC 2727, Mostyn J determines that there are three routes by which a party can seek to obtain an interim order for sale:
1. Under s.17 Married Women’s Property Act 1882 (“MWPA”);
2. Under ss.13 and 14 of Trusts of Land and Appointment of Trustees Act 1996 (“TLATA”); and
3. Under r20.2(1)(c)(v) of the Family Procedure Rules 2010. Note that Cobb J in WS v HS [2018] EWFC 11 does not agree that this rule provides freestanding jurisdiction to make an interim order for sale, as he considers this is inconsistent with the prohibition under s.24A MCA.
Whichever route is taken, Mostyn J and Cobb J agree that the court must undertake the evaluative exercise provided by s.33(6) of the Family Law Act 1996 (“FLA”). This includes, but is not limited to, considering: the housing needs of the parties, the financial resources available to them and the likely effect of any order (or a decision not to make an order) on the safety and well-being of the parties and any child(ren). The court must also consider s.33(3) of the FLA when considering whether it can order vacant possession of a property (which is a prerequisite to an order for sale). S.33(3) provides as follows:
(3) An order under this section may— …
(d) if the respondent is entitled as mentioned in subsection (1)(a)(i) [i.e. is a beneficial owner of a property], prohibit, suspend or restrict the exercise by him of his right to occupy the dwelling-house;
(e) if the respondent has home rights in relation to the dwelling-house [i.e. is not a beneficial owner of a property] and the applicant is the other spouse or civil partner, restrict or terminate those rights.
Like Cobb J in the case of WS v HS, Recorder Allen KC considered carefully the precise wording of s.33(3). He determined that there is a material difference between the permanent extinction of a spouse’s right to occupy a property (which is what is meant by the word ‘terminate’ under subsection (e)) and a temporary or time limited pause provided for by subsection (d) where the most a court can do is prohibit, suspend or restrict a spouse’s right to occupy a property.
The court in RA v KS concluded that it had no jurisdiction to make the interim order for sale sought by W as the court has no power to permanently extinguish or terminate H’s right to occupy the barn. The barn therefore remains in the parties’ joint ownership until such time as the court makes a final order for it to be sold or transferred to one or other of the parties.
The case law as is stands guides practitioners as follows: -
1. If the property is in the sole name of the party applying for an interim order for sale, it is possible for the court to make such an order. This is the case even if the opposing party has a matrimonial homes rights notice registered on the property, because the court has the power to terminate that notice (see s.33(3)(e) FLA). These are the facts of BR v VT.
2. If the property is held in joint names and one party opposes an interim order for sale, the court will not have jurisdiction to order a sale (see s.33(3)(d) FLA) as it cannot terminate the respondent’s right to occupy the property. These are the facts of WS v HS and of RA v KS.
I pause to note here that there are differing views between Cobb J in WS v HS and Mostyn J in SR v HR [2018] 2 FLR 843. Cobb J suggests that an interim order for sale could in this scenario be made if there is also an application for payment of a legal services provision order under s.24A of the Matrimonial Causes Act 1973. Mostyn J disagrees and says that an order under this legislation is only possible when making an award for capital provision, not as an interim measure.
3. If one party has no beneficial interest in their spouse’s property or a property is jointly owned but the other spouse does not agree to the property being sold at an interim stage (as in RA v KS) their only recourse would be to issue an application under TLATA.
BUT, Wilson LJ (as he then was) in the case of Miller-Smith v Miller Smith [2010] 1 FLR 1402 urged for caution in making a separate TLATA application in circumstances where financial remedy proceedings are already in play as: “the court lays down only one piece of the jigsaw, namely that the home be sold, without its being able to survey the whole picture by laying down the others”. It is not desirable for the court to only work with one piece of the jigsaw; all the pieces must be in play.
A reminder on costs
The judgment in RA v KS provides a warning to all parties when considering their approach to litigation. Satellite litigation (i.e. interim and freestanding applications within ongoing financial remedy proceedings) carries potential costs consequences. The parties in this case were reminded that costs were a live issue when W first canvassed the idea of an interim order for sale. Despite the warnings, W went on to pursue the application and, as set out above, she was unsuccessful. As a result, W was ordered to reimburse H 80% of the costs he had incurred in defending the application.
A separate note about open offers
W sought to argue that, if the application under MWPA was unsuccessful, H should be prevented from standing in the way of a sale of the barn because he had previously proposed openly that it be sold. W’s counsel submitted that this was a ‘promise’ that H should be held to. Recorder Allen KC found that it would be wrong to characterise an unaccepted offer as a ‘promise’ capable of founding an estoppel.
A copy of the full judgment can be found here: https://assets.caselaw.nationalarchives.gov.uk/ewfc/2023/102/ewfc_2023_102.pdf