A divorcee who refused to leave her banker ex-husband’s £6m home after they split is locked in a Court of Appeal ‘test case’ over his insistence she must pay him rent.
Jayne Richardson Derhalli, 57, and Kerim Derhalli, 58, enjoyed the spoils of his stellar finance career, having two children during their 27-year marriage.
They shared a five-bedroom home in one of London‘s most exclusive streets, St Mary’s Place, Kensington, as well as an 18th century estate in Devon.
But he moved out in 2014 and, as part of a divorce settlement in 2016, agreed to pay her £6.4m and millions more on the sale of their former home, which was in his name.
However, the sale was delayed in the difficult post-Brexit referendum property market, sparking a bitter court battle over her refusal to get out or pay £600,000 rent.
Kerim Derhalli, pictured, is suing his ex-wife Jayne Richardson Derhalli for £600,000 in rent as she stayed in their marital home when the sale was delayed after their divorce due to Brexit
The £6 million home in St Mary’s Place, Kensington, at the centre of Derhalli’s legal battle
Last year, High Court judge Mr Justice Fancourt ruled Mrs Derhalli had been entitled under the terms of their divorce settlement to stay rent-free for whatever amount of time it took for the house to be sold.
But the ‘absurd’ ruling is now under attack at the Court of Appeal, with Mr Derhalli’s lawyers questioning why she should get to stay rent-free in a house he owned while he had to pay to live elsewhere.
His barrister Michael Glaser QC argued that the ruling, if allowed to stand, could open the floodgates for other divorcing spouses to claim rent-free occupation of their former family homes.
‘The suggestion that the husband, for a period of two-and-a-half years, would be excluded from the matrimonial home and the wife allowed to occupy rent-free would, we would say, be absurd,’ he said.
The court heard that Mr Derhalli, the former head of commodity trading at Deutsche Bank who had made up to £800m for clients during his career, married Mrs Richardson Derhalli in 1989.
The family enjoyed a lavish lifestyle, with their Kensington home and other properties including a sumptuous 18th century estate in Dawlish, Devon, complete with 12 acres of pleasure gardens.
Jayne Richardson Derhalli, pictured, refused to leave the former marital home, claiming she had a right to stay in the property despite her ex’s lawyers insisting she must start paying rent
But their relationship hit the rocks in 2012 and the former couple, who have two grown-up children, ended their 27-year marriage with divorce in October 2016.
Mr Derhalli moved out of their London home into rented accommodation in 2014 and, in 2016, the former couple agreed a ‘clean break’ consent order to divide the family wealth.
Under the terms of that deal they agreed the London house, which was in Mr Derhalli’s name, would be sold and he would pay her another £2.25m plus half of the sale proceeds afterwards.
But they failed to find a buyer for the Kensington house at its original £8m price tag, due to the impact of Brexit on the London property market, the court heard.
Mrs Richardson Derhalli stayed put in the former matrimonial home and, in March 2017, her ex’s lawyers requested that ‘she either vacate the property within four weeks or start paying rent for her occupation’.
But she refused to budge, claiming she had a right to stay in the property, which had been the family home for over a decade, until sale, rent-free.
Pictured: An aerial view of the 12-acre country estate in Dawlish owned by the Derhalli family
In the end, after nearly three years on the market, the house in St Mary’s Place sold for just under £6m last year, with the wife quitting the house ‘on or shortly before the completion date.’
The husband subsequently sued his ex, demanding £600,000 in back rent – at a rate of £5,000 a week – for the time she stayed living in the house after he insisted she leave.
Mr Derhalli initially won his case at Central London County Court, but the decision was overturned when High Court judge Mr Justice Fancourt allowed an appeal by Mrs Richardson Derhalli in November last year.
The judge said the terms of the consent order ‘strongly indicate that it was understood that Mrs Richardson Derhalli could remain with her daughters until the home was sold.’
‘The idea that after two years of separate living she would be obliged to move out with the daughters of the marriage before a sale shortly took place, so that Mr Derhalli could move in or rent the house, seems a very peculiar idea indeed,’ he said.
At the Court of Appeal, Mr Glaser, for the husband, said the claiming of rent did not go against the ‘clean break’ nature of the divorce settlement because Mr Derhalli’s demand resulted from her refusal to get out post-divorce.
Mrs Richardson Derhalli remained in the property when the sale was delayed due to Brexit
‘Whilst Mrs Derhalli had lived in the property without Mr Derhalli living there, there was an order for it to be sold and thus Mrs Derhalli was going to have to vacate the property,’ he continued.
‘She clearly had sufficient funds to purchase alternative suitable accommodation prior to its sale from the monies to be paid to her under the terms of the consent order and from her own resources.
‘The parties agreed that neither of them had any legal or beneficial interest in the assets of the other and the property was legally and beneficially owned by Mr Derhalli.’
Mr Glaser said the ruling, if it stood, would imply that every spouse remaining in their former home pending sale would able to do so rent-free, even if owned by their former partner.
‘Not only is that construction so plainly wrong and unfair that it would be manifestly unjust for it to be allowed to stand, but this decision has already been the subject of much comment at the family bar,’ he said.
‘If the decision is allowed to stand, this plainly wrong decision will set a precedent for other judges and therefore must be corrected by this court.’
For Mrs Richardson Derhalli, Nigel Dyer QC urged the Court of Appeal to dismiss the appeal, describing Mr Justice Fancourt’s ruling as a ‘model of clarity, explanation and common sense.’
‘First, and most obviously, the consent order compromised what both parties accept were acrimonious divorce proceedings,’ he said.
‘It was intended to achieve a comprehensive financial ‘clean break’ between them.
‘Mr Derhalli’s claim for occupational rent whilst the consent order was executory is inconsistent with, and contrary to, these full and final settlement provisions and represents a collateral attack on the consent order.’
‘It is true that there are no express words in the consent order that state that Mrs Richardson Derhalli would remain in the matrimonial home until sale – it is entirely silent about when she was to depart,’ he said.
But a ‘reasonable’ person reading the consent order would be sure to conclude that she was entitled to stay until sale, because otherwise another date would have been given.
‘Given that the respondent and their daughters had been living in the matrimonial home for some 14 years and the appellant had been settled in rented accommodation elsewhere, it is overwhelmingly likely that rational parties would have intended to preserve, rather than upset, that status quo for the short period of time that the parties anticipated would be needed to achieve a sale of the matrimonial home.’
Lady Justice King, Lady Justice Asplin and Lord Justice Arnold will give their decision on the appeal at a later date.