Grandison v Joseph [2019] EWHC 977 (Fam)

Mr Justice Cohen was concerned with the husband’s appeal against a decision to force him to sell his properties if he did not transfer them into his sole name and release the wife from the corresponding mortgages. The appeal was dismissed.

The parties cohabited in 1990, married in 2006, and separated in 2009. The parties jointly owned 127 properties (albeit heavily mortgaged) [3].

The parties agreed that the property portfolio should be split, and signed a Heads of Agreement to reflect this. However, they could not agree the implementation of this agreement. As a result, they went to a final hearing in October 2014. At the final hearing, the Judge was reluctant to impose a deadline by which the parties should release each other from the joint mortgages – but the Judge did indicate that the transfer of the properties into the name of the other party should be by 1 March 2015.

The parties were unable to agree the Order and the Deed for exchange of properties until Autumn 2015. The wording of the order was essentially that: the parties should transfer the legal interests in their own properties (as per the division) into their sole names; and that they should release the other party from the mortgages on those properties. By September 2016 the wife had carried out her obligations - the husband had not. The matter came before the first instance Judge and she urged the husband to release the wife from the mortgage obligations [18].

On 23 October 2018, the first instance Judge ordered that the husband: 1) transfer the legal title of 42 of “his” properties to his own name (from either joint names or the wife’s name); 2) release the wife from the mortgages on those properties. She further ordered that if he had not done so within 6 months, they should be placed on the market for sale [1].

The husband appealed on three grounds [2]:

1. The order did not require the transfer of the legal interest in the property – just the beneficial interest;

2. The Judge was wrong to place a time limit on the phrase “best endeavours”; and

3. The Judge should not have ordered the transfer of the title as it amounted to a major variation of the final order.

Cohen J dismissed all three grounds of appeal.

Transfer of title

The husband’s case at appeal was that the Order and Deed did not provide for a transfer of the legal interest, just the beneficial interest [10]. Cohen J found that if the Order had meant just beneficial interest it would have been worded as such. He said that although the Order was “curiously drafted in the sense that it does not use the conventional words of a transfer of property order. But it is clear, in my judgment, that its intention was to be a property transfer order” [11].

Cohen J also rejected the husband’s submissions that the word “completion” on the Deed referred to the completion of the transfer of the beneficial interest only as a beneficial interest is transferred on the moment that the Order becomes effective (Mountney v Treharne [2002] FLR 930) [12 – 13].

Further, while the wife detailed the administrative problems caused by her name remaining on the title deeds, the husband claimed that it had caused her no identifiable disadvantage (as he had indemnified her against the mortgage liability). However, Cohen J noted that “it is not in my judgment the de minimis point that the husband suggests” [17].

Best endeavours

The husband’s case was that re-mortgaging the properties would be too expensive, and that best endeavours in commercial contracts does not require a party to suffer a significant financial loss. He argued that the same rule applied in family proceedings [19]. Cohen J was referred to: BM v Rockware Glass [1980] FSR 335 “he is bound to take all steps in his power which are capable of producing the desired results”; and Astor Management AG [2017] B USLR 1634 “it may in many circumstances be extremely difficult or impossible to show that a party ought reasonably to have pursued a negotiation […] burden of proof is on the party alleging failure to comply with the obligation” [20].

The husband produced a letter from his mortgage broker confirming that the re-mortgaging process would cost an additional £7,000 pm [26].

Cohen J endorsed the view of the Judge at first instance when she pointed out that best endeavours did not contain a qualification – such as a minimum cost [27]. Further, the husband had not produced evidence to show he had looked into the practicalities of re-mortgaging them other than to rely on the evidence of his broker [29]. Indeed, at first instance the wife had produced evidence of less expensive rates.

Cohen J accepted that the term best endeavours “does not fall to be construed differently in commercial and family cases”. However, he said best endeavours must be looked at in context: this was an agreement that had been reached years before and the wife had fulfilled her obligations [31].

Further, Cohen J found that the husband had not used his best endeavours to release the wife from the mortgage “indeed he had used no or next to no endeavours” [30]. For example, the husband never approached the mortgage companies to ask them to release the wife from the mortgage - Cohen J described this as an “egregious omission” [23]

The husband also argued that transferring the mortgage title would breach his mortgage contract [21]. Cohen J noted that at first instance the Judge pointed out that: first, the court’s power under section 24 of The Matrimonial Causes Act 1973 is not subject to consent by mortgage companies; second, the order originates from an independent source – the court. Therefore such an order would not constitute a breach by a party [22].

Power to order a sale

The husband argued that: first, while the power to order the sale of properties existed it should only be used in extreme circumstances; second, the order of sale constituted a variation of the original order [32]. Cohen J rejected both these arguments. He pointed out that the court gave the husband the opportunity to transfer the properties, and it could not be the case that the court was “toothless” and unable to make an order for sale in such circumstances [34].