High Court balances need to maintain stable family unit with the need to allow effective recovery of debts in novel solution

Ref. Fred Perry (Holdings) Limited v Genis [1 August 2014]

In this case, the High Court found a way to effectively balance the contrasting needs of family and commercial interests.

The case involved a claim by Fred Perry (Holdings) (the Claimant), who had already successfully obtained judgement against Mr Genis (the Defendant) as a result of him selling counterfeit goods as if they were manufactured by the Claimant – a popular clothing brand. 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 around £1.2m and there is a mortgage against the asset for £824,000 – leaving plenty of equity available to pay off the £133,000 due to the Claimant. Further complicating the matter, however, was the fact that Mr and Mrs Genis have two children – aged 14 and 9 – who attend local specialist schools for which the house was purchased due to its convenient location.

The Court’s position was partly governed by the provisions of the Trusts of Land and Appointment of Trustees Act 1996 (‘Trusts Act’), which allows discretion as to 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.

As such, the Court was faced with a difficult balancing act, between the commercial interests of Fred Perry (Holdings) and the familiar interests of Mrs Genis and her children, who relied upon the convenience of the house to maintain a strong family unit. The Trusts Act gives no guidance in this respect, so it was to the Court to decide on the foremost of these interests.

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 this Act, the Court has to have regard to housing needs and the financial resources of the parties and it has a wider discretion where there is a spouse still living in the matrimonial home – as in this case.

Regardless, the Court held it would create an anomaly if different criteria was applied under this Act than under the Trusts Act. It was a primary concern that the Court should give effect to the general policy of the law in giving priority to commercial interests.

The decision, therefore, was that sale should be allowed to proceed but, given that the Trusts Act allows discretion on the terms of this sale, the Court allowed that the sale be delayed until 31 July 2015 to give the family time to adjust and prepare for the move. Interest will accumulate on the debt during this time, so the Claimant should not lose out unduly.

Of course, with the ONS recently announcing that London house prices are growing at 19.6% year-on-year at the moment, it is the Defendant who stands to gain most out of the delayed sale – his £1.2m property could be worth £1.43m by the time sale is forced through.

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SRJ                                                                                                                                              05.11.14

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