England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE PRINCIPAL REGISTRY OF THE FAMILY DIVISION
(MR JUSTICE COLERIDGE)

		Royal Courts of Justice Strand London WC2A 2LL
		28 November 2012

1. LORD JUSTICE THORPE: The appellant husband is of Saudi Arabian nationality, as is the respondent wife. They are both about 40 years of age. They married in 1998 and there are three children, now aged respectively 13, 11 and 10. Sadly, their marriage disintegrated after they had firmly established themselves in this jurisdiction as a matter of choice, not, as is the case with many Saudi families, simply retaining a second home here for use in the summer months, electing for an English habitual residence.
2. When the marriage failed, there was a flurry of litigation, both in relation to the children -- Children Act proceedings being issued on 1 September 2008 by the wife, and in relation to divorce -- the wife petitioning in Saudi Arabia in April 2009, and the husband retaliating with proceedings in this jurisdiction some ten days later. The wife essentially succeeded in the Children Act proceedings, with a resounding judgment from Hogg J of 12 June 2009. A few days later the marriage was dissolved in Saudi Arabia on the wife's petition.
3. The husband then obtained leave to issue proceedings under part 3 of the 1984 Act from Coleridge J on 20 April 2010, and there were then interlocutory orders made by a series of Family Division judges which comprised within them orders for interim periodical payments in the husband's favour, including provision for his costs, that is to say monthly sums for him to hand over to his solicitors to meet their bills for continuing litigation.
4. The combination of divorce proceedings in two jurisdictions, the Children Act proceedings here and the part 3 claim here has resulted in the husband, who is a man not just of limited means, but a man of no means, running up a bill to his own solicitors for £489,328. Additionally, there was an inter partes costs order against him as a result of a failed application for a judge of the division to recuse. The sum that he is bound to pay under that order has been agreed at £8,600.
5. Against the grand total of near £490,000, the husband has been able to fill the tank with the maintenance pending cost provisions amounting to £104,000 in total. He has also from his own resources paid his solicitors the sum of £61,000, so that his remaining net liability to his solicitors is in the sum of £324,260.
6. At the hearing before Coleridge J, which was the final hearing of his part 3 claim, the subject of judgment of 18 October 2011, he sought a housing provision for himself to enable him to have continuing contact to his three children habitually resident in this jurisdiction. He sought periodical payments to enable him to meet the outgoings on such a property, and he sought a lump sum which would extinguish his liability to his solicitors for past incurred costs. The figure that was put to Coleridge J is very similar to the figure that Mr Swift has advanced to us in detail today. It was taken, as we see from paragraph 5 of the judgment below, to be £320,000 "currently owed to his lawyers as a result of the protracted litigation".
7. The order of Coleridge J that ultimately emerged was a sophisticated and carefully crafted order, which started with undertakings from the wife, A to H, undertakings from the husband, A to E, and then the order, the principal provision of which, namely the purchase of a property, a pied-à-terre in London which would be available to the husband for his use for the purposes of contact until the youngest child attained the age of 19, was the subject of one paragraph of the order which had a number of subclauses, first of all (a) to (i) inclusive, one of which had sub-subclauses, (i) to (iv).
8. The basic scheme was that the husband would stand to achieve some free capital in that the scheme of the order was that on the sale of the pied-à-terre at the expiration of its stated purpose, the net proceeds would be divided equally so that the husband would at last realise, in perhaps nine years' time, some capital provision as a beneficial fruit of his part 3 claim.
9. The provision that the judge decided in relation to the outstanding liability for legal costs was in the sum of £50,000, not the £320,000 sought by Mr Swift, and furthermore payment was conditional upon the husband demonstrating by comprehensive documentary evidence that he had procured the wife's removal from his family card in Saudi Arabia. So it was a sum which would become due to him on his performance of the attached condition.
10. Mr Swift was not pleased with that, and accordingly he sought permission to appeal. His appellant's notice was considered by McFarlane LJ on 28 March of this year, when he said in his third paragraph:

"Nothing in the grounds or skeleton establishes a case with a reasonable prospect of successfully challenging the exercise of the judge's wide discretion on appeal."

11. Mr Swift exercised his right to an oral hearing which was listed before Ward LJ on 21 May. Ward LJ was more indulgent and he granted permission, being persuaded by Mr Swift that there was some confusion as to whether costs which were not going to be picked up under the general rule in the Family Procedure Rules of 2010, (ie no order save where litigation misconduct established), could be made good by the court indemnifying the litigant by the alternative route of a lump sum order. During the discussion between Mr Swift and Ward LJ, there were frequent references to the judgment of Wilson LJ in the case of Radmacher in this court.
12. So Mr Swift advances a general proposition that where there is a debt for costs, because of the no order principle, the costs of each of the litigants will come out of the matrimonial assets. That is a clear statement of what generally happens. He has to go on to say that where the assets lie with one party exclusively, then the other is entitled to expect that costs incurred in litigation will be still absorbed by marital assets, even though the assets are all on the other side.
13. It seems to me that it is impossible for Mr Swift identify any principle or any procedure or practice that could come to his aid to circumscribe Coleridge J's discretion, to such an extent that he really had no alternative but to accede to the bold application. The reality in this case is that the husband has run up a bill of nearly half a million pounds without having any assets with which to discharge it, beyond the £60,000 he managed to scrape together.
14. In my view, this situation should never have developed. The ordinary rule of trade between solicitors and clients is that they either pay the costs up front or they secure by charge against some asset or alternatively against their confident expectation of the judge's liberality when he comes to divide family assets. The costs incurred in this case are quite disproportionate to the essential issues that had to be decided if they could not be agreed. There is a measure of profligacy in the bills on both sides. The situation was on its facts quite exceptional, the consequence of which is the judge's generous ambit was exceptionally wide.
15. Mr Swift's suggestion that Radmacher should have led the judge to a different and higher award is, to put it mildly, unpersuasive. These cases are entirely fact dependent, and the decision of Baron J in that case can have no bearing on how Coleridge J should have exercised his discretion here. Insofar as there is guidance, as my Lord has observed in argument, it seems if anything to go against Mr Swift's submission, since Wilson LJ was clearly close to labelling the discretion of Baron J at first instance as impermissible.
16. So for all those reasons, perhaps stating it excessively, I regard this appeal as being quite without merit. The judge exercised the discretion. He explains himself clearly in only two paragraphs of his judgment. No more was necessary. They are paragraphs 68 and 69. In those two paragraphs he briefly balances the relevant considerations and arrived at a conclusion which is manifestly well within his experienced discretion.
17. I would dismiss the appeal.
18. LORD JUSTICE PATTEN: I agree that the appeal should be dismissed for the reasons which Lord Justice Thorpe has given. The grounds of appeal contain a challenge to the judge's reasoning essentially on two bases: firstly, a failure to give proper reasons for confining the award to the sum of £50,000; and secondly, what was said to be an inconsistency, and therefore presumably an issue of principle, in relation to the limited award of £50,000 for the purposes of paying legal costs compared to the effect that that will have on the provision of housing for the husband. It is said in paragraph 30 of the grounds of appeal that the way that the judge exercised his discretion was to confer a benefit with one hand and then to take it away with the other.
19. By way of addendum to what my Lord has said, I would only add one or two points in relation to those grounds of appeal. First of all, as Lord Justice Thorpe has said in his judgment, the judge does give reasons for confining the payment of the legal costs to the sum of £50,000 contained in his order. He says in paragraph 68 of his judgment that:

"If there had been significantly more free capital and the husband was going to make a contribution to the children, the answer is of the Wilson approach [and I interpose to say that is a reference to what Wilson LJ said in Radmacher] would probably have prevailed if it was affordable. However, I really do not think it is realistic here for the wife to make anything like the sort of provision that the husband seeks without seriously jeopardising the wife's and the children's position."

20. It is therefore clear that the judge was influenced in the amount of the award he made by those factual considerations. There has been no challenge in the grounds of appeal or any serious challenge in argument to those findings made by the judge in paragraph 68, and therefore the argument that the judge has failed to give reasons, or that the exercise of discretion had no proper evidential basis, are simply not tenable.
21. So far as the issue of inconsistency is concerned, the reality of the husband's situation is that the provision of accommodation for him to enable him to visit his children during their minority is secured by the judge's order in a way which renders it immune from any challenge by the husband's trustee in bankruptcy. If the husband has no beneficial interest in the property which the wife under the order has to purchase for his use and occupation, the only interest he has is an ultimate entitlement to receive half of the net proceeds of sale at some future and as yet indeterminate date, after the children have attained full age and in the event that the parties agree that the property should be sold. That interest is secured by charge, but not, for the reasons that I have just explained, in the form that would entitle the husband's trustee to seek to realise the property in the interim and so undermine the basis of the judge's order, which was to provide the husband with accommodation for the purpose of seeing his children.
22. In those circumstances, like my Lord, I can see no error of principle disclosed in the way in which Coleridge J dealt with these issues, and I would also dismiss the appeal.
23. MR JUSTICE DAVID RICHARDS: I too would dismiss the appeal for the reasons given in the judgments of my Lords.