Husband not entitled to rent from wife who occupied matrimonial home

Husband not entitled to rent from wife who occupied matrimonial home

When a couple divorce the former matrimonial home can be sold. (What happens will depend on the needs of the family). If this happens, it may take some months, or even longer, for the sale to take place.

Until the sale is completed just one party will normally remain in occupation of the property, as the parties will usually not wish to continue to live under the same roof. But this of course means that that party will enjoy the benefit of the property, and the other party will not. This may be compensated for by the occupying party paying the mortgage and other outgoings, but that may not be enough, especially if there is no mortgage to pay.

In such circumstances it may be appropriate for the occupying party to pay rent to the other party, in return for their having the sole benefit of the property.

But under what circumstances does the occupying party have to pay rent? That was the question to be determined in a recent Court of Appeal case.

Occupational rent

The facts of the case were that the parties lived in a five-bedroomed house in Kensington, registered in the husband’s sole name. The marriage broke down and the husband left the property in 2014.

The parties were divorced in 2015 and in 2016 they agreed a financial settlement whereby the wife was to receive a lump sum of £11.5 million. The settlement was incorporated into a consent court order.

The wife received an initial £6.5 million payment, and was due to receive the balance of the lump sum when the property was sold. However, the sale was delayed due to difficulties with the post-Brexit referendum property market, and did not take place until 2019. The wife remained in occupation of the property until then.

The husband claimed that the wife should pay him ‘occupational rent’ for the period during which she had sole occupancy of the property. He sought a total of £600,000 rent, at a rate of £5,000 a week.

The wife did not agree, claiming that she had the right to live in the property rent-free, until it was sold. The husband therefore took his claim to the court.

At a first hearing the court agreed with the husband, and ordered the wife to pay the rent. However, the wife appealed to the High Court, which overturned that decision. The husband appealed against that order, to the Court of Appeal.

Implied term

The case turned upon the interpretation of the consent order.

The order made no mention of the wife paying occupational rent. However, the husband argued that a term should be implied in the order, as that is what the parties would have agreed if they had known that it would take so long for the sale to go through.

The Court of Appeal disagreed. The consent order made it quite clear that the parties accepted that its terms were final. There was no provision in the order for the wife to pay rent, only that she should pay the outgoings on the property.

Giving the leading judgment of the Court of Appeal Lady Justice King said:

“The Order built in every possible protection to prevent either party varying the lump sum and, therefore, the distribution of wealth which had been agreed between the parties … In my judgment, the husband’s interpretation of the Order would serve to undermine that clear intention by reducing the lump sum payable to the wife by the very significant sum of £600,000, she having no other means to satisfy the husband’s demand for rent at £5,000 per week.”

Accordingly, the Court of Appeal held that the wife did not have to pay occupational rent, and therefore the husband’s appeal was dismissed.

Lady Justice King added this important cautionary footnote to her judgment:

“It may be that, following this case, in order to avoid a similar dispute arising and perhaps it might be thought in an excess of caution, parties will choose to be more specific as to the precise terms under which a party remains in occupation of a matrimonial home pending sale. I repeat, however, that this case sets no precedent, incorrect or otherwise, and should rather be regarded as a somewhat sorry cautionary tale. This couple had considerable means and such was the personal animosity between them that it drove them to litigate this matter through two appeals. In most cases, the proceeds of sale of the matrimonial home are required to rehouse each of the parties and most couples would have neither the means nor the stomach for such protracted satellite litigation, as was engaged in in this case, in order to ascertain what was, in my judgment, in the end the rather obvious proper interpretation of the Order.”

The moral is clear: be specific about what you have agreed, and don’t waste money on further litigation!