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Award That Requires Borrowing Made Into Court Order

17th May 2024 By

Disagreements between separating couples all too often result in litigation that substantially reduces the assets available to them, as was illustrated by a case that recently reached the High Court. At issue was whether awards made by arbitrators in financial remedy proceedings can be made into court orders even if that would require one of the parties to borrow money.

The couple had previously had a relationship lasting a few years before resuming their relationship in 2015. They had two children before separating again in 2019. Following their separation, the mother and the children lived in an apartment that had been the couple’s home during their relationship, while the father lived in a nearby property.

The mother brought financial remedy proceedings under Schedule 1 of the Children Act 1989, which she and the father agreed to refer to arbitration. By this time, the couple had already engaged in litigation concerning the children’s welfare and had spent about £1 million on legal fees. The couple agreed that the apartment should be sold, and the arbitrator concluded that a replacement property should be purchased for the mother and children, with the father paying the mortgage.

The father challenged the arbitrator’s award on a number of grounds, including that there was no power under Schedule 1 to make an award that would require him to borrow money. After a judge upheld his challenge, the mother appealed.

The Court noted that in financial remedy proceedings, courts frequently make orders which are not expressly provided for by legislation, such as ordering that parties jointly purchase a property or indemnify each other against debts. Disagreeing with the judge’s interpretation of the relevant provisions of Schedule 1, the Court upheld the mother’s appeal. In ruling that outstanding issues in the case should be remitted for a further hearing, the Court expressed its despair at the further cost and delay this would entail.

Source: Concious

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