Fred Perry (Holdings) Limited v Genis

 

The Message

An Englishwoman’s home is not her castle.

The Case

The High Court has decided whether the interests of a husband’s creditor in the matrimonial home take preference over those of his wife and children The Claimant, Fred Perry (Holdings), had obtained Judgment against Mr Genis for damages as a result of him selling counterfeit goods as if they were manufactured by the Claimant. They obtained charging orders on his interest in the matrimonial home in Mill Hill in North London and, in the absence of Mr and Mrs Genis selling the property to repay this debt, the Claimant applied to Court for an Order for the sale.

The house is estimated to be worth about £1.2 million and there is a mortgage with Bank of Scotland Plc for some £824,000. The house is in the sole name of Mr Genis but his wife contributed £100,000 to the purchase and has made mortgage payments since June 2012 (so she has a prior claim in this respect). Even so, there is sufficient equity in the property to repay the sum of approximately £133,000 due to the Claimant.

Mr and Mrs Genis have 2 children aged 14 and 9. They attend local specialist schools and the house was bought so that they could readily attend these schools. If the house is sold, they may well have to move schools.

The Court has a discretion under the Trusts of Land and Appointment of Trustees Act 1996 (“the Trusts Act”) whether or not to order a sale and as to the terms of any sale. In exercising such discretion, the Court must take into account the relevant background to the purchase of the property and the purpose behind it and must have regard to the welfare of any child or occupier who would be affected by a sale.

However, the Court also has to take into account the interests of the creditor and it is therefore a question as to how to balance the interests of all the parties? The Trusts Act gives no guidance in this respect so the Court has had to determine whose interests should take precedence?

On the one hand, the Court has to have regard to the public interest in maintaining a stable family unit and protecting the children whilst, on the other hand, it has to have regard to the commercial need to allow for effective recovery of debts. Based on previous case law, the Court held that commercial interests should generally take priority over family interests so far as the Trusts Act was concerned but that was not the end of the matter as Mrs Genis also had rights under the Family Law Act 1996 in respect of which there was no previous binding case authority.

Under the Family Law Act 1996, the Court has to have regard to housing needs and the financial resources of the parties and their conduct and it has a wider discretion where there is a spouse still living in the matrimonial home. However, the Court held it would create an anomaly if different criteria was applied under this Act then under the Trusts Act and that it should give effect to the general policy of the law in giving priority to commercial interests (such as on bankruptcy where home rights can be superseded).

Given that the only possible source for payment was a sale of the property, the Court ordered that a sale should be allowed to proceed but, in recognition of the effect this would have on the family, it delayed any sale until 31 July 2015. Given interest is accumulating on the debt, it felt a year’s delay would not prejudice the Claimant.