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Mostyn J confirms that family court has power to order indemnity in respect of mortgage liability

Such orders have been made ‘routinely’ over last three years

Mr Justice Mostyn, giving a judgment approved by the President of the Family Division, has confirmed that the Family Court has power to make an order in relation to mortgage payments directing one party to make such payments and/or indemnify the other against non-payment.

The matter arose in CH v WH [2017] EWHC 2379 (Fam) which concerned financial remedy proceedings in the Family Court in Southampton. In that case district judges had refused to approve a draft consent order which provided for two jointly owned and mortgaged properties to be transferred respectively to the wife and the husband. The draft order required each party to use his or her best endeavours to procure the release of the other party from the mortgage on the property that he or she received and, in any event, to indemnify that other party against liability thereunder.

In his judgment Mostyn J quotes the Financial Remedies Working Group's first report of 31 July 2014 which in turn quotes approvingly his justification of the inclusion within an order of such provisions:

"Under the new s31E(1)(a) MFPA 1984 in any proceedings in the family court, the court may make any order which could be made by the High Court if the proceedings were in the High Court. The High Court has power to order or decree an indemnity. This is an equitable remedy originally vested in the Court of Chancery which was subsumed into the High Court by the Supreme Court of Judicature Act 1873. It was the very relief initially ordered in Salomon v A Salomon and Co Ltd [1897] AC 22 (but which was later set aside by the House of Lords as offending the rule about the separate legal personality of companies). As to mortgage and other outgoings in my view the power to order A to make payment to B plainly includes the power to order A to make payments on behalf of B.  The greater includes the lesser. It was necessary to spell out the power to order the payment of mortgage and other outgoings in Part IV FLA 1996 proceedings (see s40(1)(a)) because the wider direct power does not exist in those proceedings. It would be anomalous if the power to order payment of outgoings only existed in Part 4 but not FR proceedings. It is necessary in my view for the court to have these powers if only to cover the position if someone is not prepared to give the necessary undertakings or is not participating in the proceedings."

The Group in its final report of 15 December 2014 specifically reiterated and maintained its recommendation that such provisions should be within the power of the court to make. The judge noted that over the last three years the orders in questions have been made routinely until this problem has arisen in Southampton.

Mostyn J concluded that the provision within the draft consent order was 'squarely within the power of the High Court to order, and is therefore within the power of the Family Court.'

For the judgment, click here.