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Home > Judgments > 2008 archive

Ansari v Ansari & Ors [2008] EWCA Civ 1456

Appeal by wife against a previous appeal overturning the setting aside of a charge on her matrimonial home after her husband left the home and sold it to another couple. Appeal dismissed.

The husband left the matrimonial home, which was in his sole name, and the wife registered her rights under ss30-33 of the Family Law Act 1996. The husband then proceeded to sell the house although the wife remained in occupation. The solicitors acting for the purchasers and the mortgage bank had requested that the notice be removed but this was not completed. The wife then started proceedings to prevent the husband dealing with the sale proceeds but did not seek any relief against the bank’s charge. At first instance, the district judge set aside the sale and the charge as a reviewable disposition under s37 of the MCA 1973. On appeal to the Circuit Judge allowed the bank’s appeal against setting aside the charge so the wife appealed that decision.

In the Court of Appeal, Longmore LJ identified three questions: i) was the transaction a reviewable disposition under s37?; ii) could the bank claim that it had acted in good faith and with no notice of the husband’s intention to defeat the wife’s claims?; and iii) was setting aside the charge consequential on setting aside the sale? He found that the disposition was not reviewable as only dispositions made by the respondent to the ancillary relief proceedings (ie the husband) can be reviewed. Secondly, even if it was a reviewable disposition, the Bank had acted in good faith (under s 37(4)) and notice of the wife’s rights was not the same as notice of the husband’s intention to defeat her claims. Finally, the charge could not be set aside as a consequence of setting aside the sale, again as the bank had acted in good faith.
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Neutral Citation Number: [2008] EWCA Civ 1456
Case No: B2/2008/1643
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE TAMESIDE COUNTY COURT
HIS HONOUR JUDGE RAYNOR QC
TS07DO00373
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 19th December 2008
Before :

THE RIGHT HONOURABLE LORD JUSTICE LONGMORE
THE RIGHT HONOURABLE LORD JUSTICE WILSON
and
THE RIGHT HONOURABLE LORD JUSTICE LAWRENCE COLLINS
- - - - - - - - - - - - - - - - - - - - -
Between :

ADEEBA WAHID ANSARI (Wife) (Appellant)

- and - 

KHALID ANSARI (Husband) (Respondent)

-and-

1) MOHAMMED LULU MIAH
2) AYSHA KHANOM MIAH
3) BANK OF SCOTLAND (SUCCESSOR TO HALIFAX PLC) TRADING AS BIRMINGHAM MIDSHIRES (Intervenors)

- - - - - - - - - - - - - - - - - - - - -

Mr Christopher McNall (instructed by Beevers) for the Appellant
Mr Simon Clegg (instructed by Rees Page) for the Third Intervenor

Hearing date: 10th December 2008
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Judgment
 
Lord Justice Longmore:
1. Mr Ansari (“the husband”) left the matrimonial home at 49 Uxbridge Street in Ashton Under Lyme on 23rd December 2006.  Mrs Ansari (“the wife”) registered notice of her matrimonial home rights on 22nd January 2007 pursuant to the provisions of sections 30 – 33 of the Family Law Act 1996.  The home was at the time vested in the sole name of the husband and was subject to a mortgage in favour of the Nationwide Building Society securing a loan of about £17,000.

2. On 21st February 2007 the husband’s solicitors Messrs Thompson & Cooke informed the solicitors, who had caused the notice to be registered on behalf of the wife, that the matrimonial home was to be sold subject to her rights of occupation and that the buyers would enter into a tenancy agreement with the wife.  They asked for the notice on the register to be removed.  The wife’s solicitors had, however ceased to act and we were told that the wife never saw that letter.

3. On 4th May 2007 the husband, being fully aware of his wife’s rights, completed the sale of the house to Mr and Mrs Miah who also knew of the wife’s rights.  In due course District Judge Osborne was to hold that this sale was intended, by both the husband and the Miahs, to defeat the rights of the wife.  The sale price was £88,000 and Mr and Mrs Miah took out a mortgage for £75,000 with Birmingham Midshires, a trading name for Halifax Plc, now Bank of Scotland Plc (to whom I shall refer as “the Bank”).  The same firm of solicitors, Messrs Pluck Andrew, acted for both Mr and Mrs Miah and the Bank.  On 18th April 2007 Pluck Andrew had asked Thompson & Cooke to undertake to remove the wife’s notice of her home rights on completion and received the answer by letter of 23rd April 2007 that they would give no such undertaking.

4. On completion of the sale the Nationwide mortgage was discharged and the husband was paid the remainder of the purchase price in a sum of about £70,000.  The wife’s notice of her home rights was never removed.

5. On 24th May 2007 the wife, having instructed new solicitors, applied for an order forbidding the husband from dealing with the proceeds of sale and for an order setting aside the fraudulent sale to Mr and Mrs Miah but she did not then seek any specific relief in relation to the Bank’s charge granted to the Miahs.  The Bank registered its charge in August 2007.  By direction of the court the proceeds of sale remain on deposit with the husband’s solicitors.

6. On 14th November 2007 District Judge Osborne sitting in the Tameside County Court dealt with the wife’s applications to set aside the sale to the Miahs and decided that the sale was a reviewable disposition pursuant to section 37(2) of the Matrimonial Cause Act 1973 (“the Act”).  He indicated that, subject to any argument from the Bank, both the sale and the Bank’s charge of 4th May would be set aside.  The Bank decided to object and on 29th January 2008 the Bank appeared in order to resist the setting aside of its charge.  The Bank relied on section 37(4) claiming that it had obtained the charge in good faith for bona fide consideration.  The District Judge, however, invoked s. 37(3) of the Act which provided:-

“The court shall give such consequential directions as it thinks fit for giving effect to the order including directions requiring the making of any payments or the disposal of the property.”

He held that, in the light of the sub-section, he had power to order the Bank to vacate its Land Registry entry.  That meant that the property would no longer be subject to any charge by the Bank although the Bank could still, of course, enforce the personal covenants made with it by Mr and Mrs Miah.  He held, further, that the balance of the purchase price held by Thompson & Cooke (after reservation of a sum to be held on account of the liability of Mr and Mrs Miah to pay the wife’s costs of the application) should be paid to the Bank, that the husband should execute a new charge in favour of the Bank of £17,733 (the amount paid to the Nationwide to discharge their mortgage) and that the husband should be responsible for the payments under that new mortgage.  The wife could thus live in the house, at any rate until decree absolute of divorce or further order in the interim, without making any mortgage payments herself.

7. The District Judge was unfortunately not referred to Green v Green [1981] 1 WLR 391 in which Eastham J had held that section 37(3) of the 1983 Act was not wide enough in its terms to enable a judge to set aside a disposition granted by someone other than the husband or wife.  That was because sub-section 3 only enabled a judge to give directions “consequential” on setting aside a disposition which was reviewable under sub-section 2 and sub-section 2 only applied to dispositions made by one or other of the parties to a marriage.  That case is, of course, similar to the present case save that there is no indication in Green that the wife had registered any caution of which the bank in that case was to be deemed to have notice.

8. The Bank in the present case appealed. His Honour Judge Raynor QC sitting at Tameside County Court decided he was bound by Green v Green and held that section 37(3) of the Act did not enable charges between banks and third parties to be set aside.  He therefore allowed the Bank’s appeal and set aside those parts of the District Judge’s order set out in para 6 above.  The charge therefore remains valid and binding as between the Miahs and the Bank and, presumably, remains enforceable against the property, always subject to the matrimonial home rights of the wife.  Judge Raynor remitted the matter to the District Judge to consider what, on any view, may be the somewhat complex ramifications of his order, about which – rightly – we have not heard argument. 

9. On 5th August 2008 Stanley Burnton LJ gave Mrs Ansari permission to appeal against the order setting aside the vacation of the Bank’s charge and invited the parties to address the consequences of the registration by the wife of notice of her home rights.

10. Three questions therefore arise:-

i) Was the charge to the Bank of 4th May 2007 itself a reviewable disposition within section 37(2)(b) of the 1973 Act?
ii) If so, can the Bank rely on the provisions of 37(4) to say that the charge is not a reviewable disposition in as much as the Bank acted in good faith and without notice of any intention on the part of the husband to defeat the wife’s claim for financial relief?
iii) Can the charge be set aside pursuant to section 37(3) of the Act as relief consequential on the setting aside of the sale to Mr and Mrs Miah?

The Bank accepted Stanley Burnton LJ’s invitation in relation to the wife’s home rights by conceding that it had notice of the wife’s home rights and that it is likely in due course that the wife will (in addition to, or alternatively to, any claims against the husband for ancillary relief) seek an order pursuant to section 33(5) of the Family Law Act 1996 that she can live in the house beyond decree absolute and, indeed, indefinitely. 

11. The relevant parts of section 37 of the 1973 Act provide:-

“(2) Where proceedings for financial relief are brought by one person against another, the court may, on the application of the first-mentioned person –

(a) if it is satisfied that the other party to the proceedings is, with the intention of defeating the claim for financial relief, about to make any disposition or to transfer out of the jurisdiction or otherwise deal with any property, make such order as it thinks fit for restraining the other party from so doing or otherwise for protecting the claim;
(b) if it is satisfied that the other party has, with that intention, made a reviewable disposition and that if the disposition were set aside financial relief or different financial relief would be granted to the applicant, make an order setting aside the disposition;
…………

and an application for the purposes of paragraph (b) above shall be made in the proceedings for the financial relief in question.

(3) Where the court makes an order under subsection (2)(b) above setting aside a disposition it shall give such consequential directions as it thinks fit for giving effect to the order (including directions requiring the making of any payments or the disposal of any property).

(4) Any disposition made by the other party to the proceedings for financial relief in question (whether before or after the commencement of those proceedings) is a reviewable disposition for the purposes of subsection (2)(b) above unless it was made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any intention on the part of the other party to defeat the applicant’s claim for financial relief.”

Section 37(2)
12. Mr McNall for the wife submitted that the purchase by the Miahs from the husband and the grant of the charge by the Miahs to the Bank should be regarded as one disposition since the purchase would never have happened but for the fact that the Bank was prepared to lend money to the Miahs to fund the purchase.  This is an impossible argument.  Quite apart from the fact that the purchase contract and the contract granting the charge are two separate agreements contained in two separate documents, they are not even between the same parties.  The husband is not a party to the Bank’s charge and the court can only make an order setting aside a disposition if it is satisfied that “the other party” has made a reviewable disposition.  The words “the other party” in sub-section (2)(b) of section 37 refer back to the words at the beginning of sub-section (2):-

“where proceedings for financial relief are brought by one person against another.”

The court has, therefore, to be satisfied that “the other party to the proceedings” has, with the intention of defeating a claim for financial relief, made a disposition, before it can set aside the disposition.  That “other party” to the proceedings can only be the respondent to the application for financial relief as defined in section 37(1) of the Act – in other words, in this case, the husband.  Sub-section (2) cannot apply to a disposition made by someone other than the respondent to the proceedings for financial relief.  The fact that the Bank at a later stage was granted permission to intervene in the proceedings under section 37 does not make the Bank a party to proceedings for financial relief as defined in section 37(1).

13. For these reasons it is not, in my view, possible to say that the charge granted by the Miahs to the Bank on the security of 49 Uxbridge Street is a reviewable disposition under section 37(2) of the 1973 Act.

14. Even if it were a reviewable disposition, it would be necessary to consider whether the Bank could rely on section 37(4) of the 1973 Act.

Section 37(4)
15. Mr McNall for the wife relied on the fact that the Bank’s solicitors Messrs Pluck Andrew had actual notice of the wife’s home rights under the Family Law Act 1996 and submitted that the Bank must be deemed to have the notice which their solicitors had.  Mr Clegg for the Bank did not resist that proposition.  Mr McNall accepted that the Bank had not acted in bad faith but submitted that they could not claim to have acted without notice of any intention on the part of the husband to defeat the wife’s claim for financial relief and so could not rely on section 37(4).

16. This submission confuses two concepts of notice.  It is, of course, correct that the Bank has notice of the wife’s home rights.  They are on the register and it is the mere fact of registration which constitutes notice to the world of those rights.  It does not by any means follow that the Bank is on notice of the husband’s intention to defeat the wife’s claim for financial relief.  The mere fact that notice of home rights has been given by registration says nothing on its own about the husband’s intention.  Pluck Andrew knew that the registration would not be removed.  It is, no doubt, the case that that knowledge must be attributed to the Bank.  But the fact that the wife’s home rights are to remain on the register does not indicate an intention on the part of the husband to defeat the wife’s claim for financial relief.  He might, for all the bank knew, have been quite content to let the lawyers sort out his wife’s rights in whatever way seemed to them to be best.

17. No proper attention was given to the precise terms of section 37(4) at the second hearing before the District Judge but the wife accepted (and accepts now) that the Bank acted in good faith.  It would not be consistent with that concession for the wife to assert that the Bank itself knew of the husband’s intention to defeat the wife’s claim.  The highest it could be put would be to say that Messrs Pluck Andrew either knew (or ought to have known) on 4th May 2007 that the husband intended to defeat the wife’s claim for financial relief and that then actual (or constructive) knowledge should be imputed to the Bank.  But no attempt to prove that state of affairs was made.  The District Judge merely said that he did not agree with Mr Clegg for the Bank that sub-section 37(4) was engaged.  That was because the district judge exercised what he thought were his powers under sub-section (3) and for that purpose he did not need to decide whether the Bank would have had a defence under sub-section (4) to the claim that the charge should be set aside.  But the District Judge did say that, if sub-section (4) had been engaged, Mr Clegg’s submissions might well be right since the Bank was in no sense personally culpable although they were, of course, fixed with notice of the wife’s home rights.  There is certainly no finding that either the Bank or Pluck Andrew had notice of the husband’s intent to defeat his wife’s claims.

18. If, therefore, the charge had been a reviewable disposition within section 37(2) (which it was not), the Bank would have had a good defence to the claim that it should be set aside.  That leaves the question whether, the charge not being itself a reviewable disposition, it can nevertheless be set aside as a consequence of setting aside the sale.

Section 37(3)
19. The words of sub-section (3) are undoubtedly very wide.  Eastham J decided in Green v Green that they were not wide enough to set aside a disposition other than that made by a party to the proceedings for financial relief and HHJ Raynor correctly held that he was bound by that decision.  We are not bound and can consider the matter afresh.

20. The broad question is whether the court can set aside a disposition which is made subsequently to the reviewable disposition.  One can envisage a case in which a husband sells to X who knows the husband intends to defeat the wife’s claim and X then sells to Y who likewise knows that such is the husband’s intention.  If all parties conspire to defeat the wife’s claim, the wife should surely be able to set aside both dispositions.  The second disposition is not a reviewable disposition for the purpose of sub-section (2) because it was not made by the husband.  It could only be set aside by invoking sub-section (3) but, for my part, I can see no reason not to invoke the sub-section in those circumstances.  If it cannot be invoked, there would be an easy way to defeat a wife’s legitimate claim.

21. So I would not say that the sub-section can never be used to set aside a subsequent disposition.  Eastham J merely accepted the bank’s submission in Green v Green that the words “consequential directions” are largely or entirely restricted to directions about repayment of monies.  But I do not think the sub-section is as narrow as that.

22. I am however, clear that it should not be used in the circumstances of the present case since there is no question at all of the Bank being a party to any conspiracy or even (as I have already said) having notice of any intention on the part of the husband to defeat the wife’s rights.  The discretion conferred by sub-section (3), even if it can be used to set aside dispositions subsequent to the first disposition in a case where the parties acted in bad faith, should certainly not be used to set aside a subsequent disposition for valuable consideration to a person who acted in relation to it in good faith and without such notice.  That is this case and HH Judge Raynor came to the correct conclusion.  I would dismiss this appeal.

Lord Justice Wilson:
23. I agree.

Lord Justice Lawrence Collins:
24. I also agree.