Rainscourt Family Law Solicitors

Delaying the distribution of the assets: what is a Mesher order and a deferred charge?

Family solicitors use previous cases to name things.  So we have Calderbank letters from Calderbank v Calderbank, Rose orders from Rose v Rose and Mesher orders from Mesher v Mesher and Hall.  I appreciate that this is not too helpful for the individual who is self-represented, or I suppose for the individual involved, whose name has become synonymous with a point in Family Law doctrine.

In this blog I am looking at the situation where there are insufficient funds to meet the capital needs of both parties, and one person, usually the higher earner, needs to be locked out of their capital for a while to enable ends to be met. This can often result in the parties using a “Mesher” in their agreement.

The recent case of Tattersall v Tattersall* is a good working example to explain this concept. The couple were married for 10 years and had a 3 year old child, with the wife and child living in Oxford.  From the global equity pot of approximately £200,000 the wife was to be awarded just under 70% of the capital, to enable her to buy a property with a manageable mortgage, and to clear some debt.

The husband appealed on the basis that this outcome was not fair.  He argued that the wife should have given him a lump sum at a future date, to equalise the capital distribution more equally.

In terms of the mechanics of how this works, there are the mainstream options of the traditional Mesher or the deferred charge.  In a traditional Mesher, a property (usually a former matrimonial home) is held in joint names by both parties, until an agreed trigger point is reached and the property then sold, and proceeds distributed.  A standard set of trigger points might be remarriage, cohabitation for a defined period, the children reaching a certain age or point of education or sale of the property.  These are points which will be negotiated between the parties.  A deferred charge is an option where a property is either owned by or is transferred into the name of one of the parties, and the other party puts a charge against that property.  This interest is then realised at a later, defined, point and the capital is released.

There is often a perception of unfairness surrounding these orders, for both spouses.  I suppose that this is because it is an imperfect solution, for an imperfect situation.

If the carer of the child or children of the family is given residence of the family home for a restricted period, and then she or he must move out post A-levels, there can be a sense that that spouse is being viewed as a carer of children, with no spousal rights of his or her own.  To then be placed in the position of seeking a mortgage and purchasing a property with a percentage of remaining net equity can be daunting, particularly if that individual has stunted career progression as a result of their caring responsibilities over the years.

However, on the flip side, one of the spouses is going to be locked out of their capital for a significant number of years, and if there is a joint mortgage, may be unable to purchase another property if their mortgage capacity is restricted by this ongoing liability.

In the example of Tattershall, the court declined to provide the husband with a share in the wife’s property to be realised at a future date.  The point was made by the court that the wife had a day to day responsibility for the 3 year old child; the husband had a higher earning capacity (the court found it was more than double that of the wife); there was an opportunity for conflict which could arise as a result of a divorced couple having ongoing financial ties.  The court gave ”consideration to the practicalities for W in the event of a Mesher order being made along the lines that H was seeking, that is that H’s share in W’s home would have to be paid to him approximately 20 years or so from now when W would be in her late fifties. In all the circumstances, in my view the judge was entitled to conclude that justice could and should be done between the parties without imposing a Mesher order.”

The specific asset set of the parties must play the determining role in whether delayed realisation of an interest in the property is fair and appropriate.  In this case the parties owned many properties, and the conclusion of the judge would result in the husband exiting the marriage with sole ownership of the property in which he was residing at the time of the hearing, and enjoying the benefit of his unencumbered higher earning capacity. However, the judge did state that “There is no doubt that some judges might have made such an order” and on another occasion, these facts could certainly have led to a Mesher or deferred charge.  Financial remedy outcomes can only be predicted within a bracket of settlement, and never more so than in these types of cases, with a limited pot, and competing needs.

*[2013]EWCA Civ 774

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