Wodehouse v Wodehouse [2018] – Jurisdiction of the Court to make lump sum orders against third parties

Danny Bayraktarova, a Caseworker in the Family Department, considers the case of Wodehouse v Wodehouse [2018] EWCA Civ 3009 concerning the division of matrimonial assets upon divorce. The parties to this case were married for 20 years. The husband had accrued large amount of debts during the marriage and he was now bankrupt for the second time. The husband was also a beneficiary to a family trust which loaned the parties the purchase money for a larger matrimonial home, expecting that their previous home would be sold to repay the loan. In addition, the wife had also given the husband various sums throughout the marriage from the sale and mortgage of properties. The previous matrimonial home however was not sold and instead the husband increased the mortgage on it to repay his other debts. The husband however defaulted on the mortgage, leading to the home being repossessed and leaving the parties in debt of approximately £97,000. The wife divorced the husband in 2015 and both parties were in difficult financial position. The deputy district judge presiding over the case made the following orders:

1. Pension sharing order, giving the wife 50% of the husband’s pension;
2. Sale of the matrimonial home with division of the proceeds of sale in equal shares.

The Judge also ordered the husband to pay the wife a lump sum of £138,000 which represented the sums the wife had given to the husband during the marriage and the mortgage debt. The Judge further ordered that the family trust would be required to “pay or cause to be paid” any balance left owing to the wife. This provision was drafted by wife’s counsel and accepted by the Judge.The matrimonial home was sold for less than expected leaving a shortfall of approximately £15,000-£20,000, owing to the family trust, which the trustees would deduct from any eventual share accruing to the husband on the death of his mother. The husband appealed.On the first appeal the lump sum was reduced to £90,000 to reflect the fact that the wife was joint owner of the mortgaged property. The husband however appealed again. His appealed was allowed in respect of the lump sum order only. The Court held that the deputy district judge had no jurisdiction under the Matrimonial Causes Act 1973 to order lump sum payments against third parties. The Court also noted that the deputy district judge had not had the advantage of being a specialist matrimonial finance judge. Both parties were represented pro bono at the appeal and as the wife could not face the prospect of further litigation and because she had not expected to receive a lump sum in the first place, the Court did not remit the matter for re-hearing. This was despite the fact that this left the wife open to enforcement proceedings from the mortgage company. If you have a family law issue and need advice, please contact our family law department on 0208 808 7535 or for an appointment, contact Mavis on 020 8885 7986.