Consent Orders are a legal record of the financial agreement reached when a couple gets divorced. The orders are negotiated and drafted between the parties and their solicitors before being submitted to the court for judicial approval. Because the document lays out the future financial landscape for each side, it’s crucial to get the details of consent orders right. Derhalli v Derhalli, a 2021 Court of Appeal case demonstrates just how costly ambiguity in consent orders can be. We discuss the case below.

Derhalli v Derhalli And A £600,000 Rent Claim

The couple agreed a consent order to finalise their divorce in 2016. Fundamental to the agreement was that the family home (then valued at £7million) would be sold and part of the proceeds would be paid as a lump sum to the wife. The order approved by the family court judge was silent in relation to occupation of the family home while it was on the market. There was however a provision that the wife would meet the running costs of the home and that the husband would give 24 hours notice before attending the property.

Shortly after the consent order was formalised the Brexit referendum result led to a slump in sales of high end London property. As a result it was not until 2019 that the house was sold (for much less than the original £7million estimate).

In 2017, with the former matrimonial home still on the market and the wife and children continuing to reside there, the husband demanded that the wife pay rent of £5,000 per week. When rent payments failed to materialise the husband issued possession proceedings and damages for trespass amounting to £600,000.

Ultimately the couple argued the case all the way to the Court of Appeal. The issue at stake was clear: Would a reasonable reader of the consent order think the parties intended the wife to live in the matrimonial home rent free until it was sold?

Court Of Appeal Interprets Of The Consent Order

Lady Justice King gave the main judgment in the case. She was adamant that she could only consider the circumstances that existed between the parties at the time the consent order was approved.  The facts as she saw them were these:

  • The agreement to sell the house had been reached in the context of divorce
  • The sale price would be agreed by both husband and wife
  • The wife would take over the running costs
  • Future attendance at the property by the husband was regulated
  • It was anticipated that the house would sell “relatively briskly”
  • Thereafter, the wife would receive a substantial lump sum from the house proceeds

What was not known at the time of the consent order was that the Brexit referendum result would have serious consequences for the housing market. Lady Justice King couldn’t take into account the fact that it took more than two years to sell the property.

As things turned out it was true that the husband had made a ‘bad bargain’. He had effectively provided his wife with rent-free accommodation at a salubrious address for two years. But the court could not rewrite the consent order to account for this.

Comment

The case demonstrates the need to take extreme care when drafting consent orders that cover financial settlements. Courts can’t use the benefit of hindsight to interpret such agreements. Here both parties assumed that the house would sell quickly in what was then a buoyant London property market. The fact that the result of the Brexit referendum stalled the sale of many high-end properties in London (like the former matrimonial home in this case) could not be implied into the consent order. The wife was entitled to occupy the home, rent free, until it was sold – however long that may take. In her closing remarks Lady Justice King described the case as a ‘sorry, cautionary tale”. She suggested that to avoid a similar dispute arising in the future parties in divorce proceedings who are in the process of agreeing a consent order may wish to be more specific as to the precise terms under which a party remains in occupation of a matrimonial home pending sale.

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