England and Wales Family Court Decisions (other Judges)

IN THE FAMILY COURT SITTING AT MANCHESTER

		Manchester Civil Justice Centre 1 Bridge Street West M60 9DJ
		9th October 2014

JUDGMENT
1. THE JUDGE: This judgment follows the final hearing of financial remedy proceedings between Mr and Mrs B. Mrs B whose application it is has been represented by Mr Dyer QC and Mr Nosworthy, and Mr B has represented himself. Mr B has made several apologies for his performance as an advocate. He has no need to apologise as I am satisfied he has laid before the court all the points he would want to make and he cross-examined Mrs B with commendable restraint.
2. I heard evidence from Mrs B, from Mr B and from Mr Lewis, a chartered accountant of Messrs Mazars, who had prepared a report dated 23^rd May 2014 and answered written questions from both sides. Unfortunately, the case could not conclude in the time available and I invited counsel for Mrs B to provide me with written closing submissions and provided for Mr B to respond in writing as well. I am happy that both parties have put before me both the evidence that they wanted to in support of their case and the arguments relevant to the questions I have to decide.
3. Mr and Mrs B married on the 3^rd June 2002 and have two children, Oliver who is 9 years old and has a profound disability and Lucia who will shortly be 4 years old. The final separation was on the 1^st January 2011 and the divorce proceedings have got as far as decree nisi pronounced on the 13^th April 2011.
4. In approaching this case I remind myself that there are two stages to the process. First of all I must assess what there is in the case and, secondly, I must make such orders as are necessary to distribute the assets that there are fairly between Mr and Mrs B giving first consideration to the welfare needs of their children.
5. I remind myself that in carrying out this exercise, I must apply section 25 of the Matrimonial Causes Act 1973. Sub-section 2 provides me with a checklist of matters that I must have particular regard to:

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire.

The issue of income and earning capacity and the financial resources that the parties have, or are likely to have in the foreseeable future, has been the centrepiece of this case and the matter I will return to in detail.

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future.

Both parties need a home. Mr B has two children from an earlier marriage who are now well into their teenage years and whose dependency will finish within the foreseeable future. There are, of course, the two children from the marriage who he sees regularly for visits at weekend and school holidays. Mrs B requires a home and she has obligations to the children, particularly Oliver with his disabilities who, I am quite satisfied from the description she gave to me, is both a physical drain and an emotional drain on her resources. That dependency of Oliver is likely to continue for both of his parents for the foreseeable future and, of course, Lucia has yet to start school.

(c) the standard of living enjoyed by the family before the breakdown of the marriage.

The standard of living was fairly luxurious. The parties lived in a substantial home in Cheshire, a house with some history, valued at the time of these proceedings at £1.5 million. They had owned a house in the south of France in addition of a similar value. Mr B drove a Bentley motor car and the indications I have is that this family enjoyed a very high standard of living when things were going well.

(d) the age of each party to the marriage and the duration of the marriage.

Mr B is 46 years of age and, as I have indicated, this is his second marriage. Mrs B is 36 years of age and is now pregnant by her boyfriend – indeed, by the time this judgment is delivered may have already given birth. They were therefore together for eight and a half years.

(e) any physical or mental disability of either of the parties to the marriage".

Happily, there is none

(f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family.

In this marriage the parties predominantly carried out what might be termed 'traditional roles' with Mr B as the breadwinner and Mrs B as the homemaker. Once Oliver was born he became the primary focus of Mrs B's attentions, requiring medical treatment from time to time. That is not to say that Mr B has not made a contribution to looking after the children because he clearly has. Both of those contributions are likely to continue into the future and, of course, I anticipate Mr B will be continuing to make a financial contribution towards the children. I readily find that both these parents have made a full contribution to the welfare of the family and I would not distinguish between them.

(g) the conduct of each of the parties, if that conduct is such that would in the opinion of the court be inequitable to disregard it.

Neither party has argued that there is any such relevant conduct here.

(h) the value to each of the parties to the marriage of any benefit…which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

There is no such loss of relevant benefits.

6. So what then of the matters at the heart of this case? Let me start by looking at earning capacity. This is relevant for Mrs B. It is Mr B's case that she can and does have a significant earning capacity allowing her to be independent and to provide for herself for the future. The history of the matter is that for less than two years some 13 years ago, Mrs B earned £30,000 gross as an event manager with Yorkshire Forward. After that she set up her own business in event management but appears to have made no money. Since 2005 her primary occupation has been as Oliver's carer. She has dabbled in event management with her father, a man in his mid-60s, who also has a background in event management. There is, however, no evidence that she has made any money. My finding is that she has some very limited earning capacity but in reality it is nominal. Her current pregnancy to her boyfriend really changes nothing.
7. Section 25(a) of the Matrimonial Causes Act requires me to consider whether the financial obligations of each party towards the other can be terminated – what is generally known as the 'clean break' provision. There is considerable merit in this case in effecting a clean break between the adults, a matter which I will consider further in due course and try and put in its overall context.
8. What about Mr B's earning capacity and his capital, as these are tied up together? Mr B has been a businessman. He has been involved in many, many limited companies a great many of which have now gone into administration or been liquidated. His expertise is in land remediation. In the mid-2000s he was clearly earning a substantial amount of money. The documentation relating to his business at that time is now said to be with the liquidator but Mr B tells me that he was earning something of the order of a quarter of a million pounds a year. He appears to have received bonuses in addition. This allowed him to purchase the home in France in 2006 for €1.3 million with a mortgage of €900,000. The matrimonial home, which was, I think, the third house that the parties had owned together, was purchased in 2008 with a £1.2 million mortgage. The Bentley motor car that he drove was subject to finance.
9. By 2009 the landscape had changed and his primary vehicle, a company called [Company A], had gone into administration. In May 2010 the French villa was sold. That produced equity of £220,000. That was used to pay debts including the Bentley finance and, in effect, nothing was left. In June 2012 the former matrimonial home was sold. The mortgage was substantially in arrears as Mr B had not been paying it and all it realised was £16,000. Mr B blames the economic recession that hit the building industry. I have no doubt that that was a very large contributory factor in the financial retrenchment of his businesses. It means that at the time of the breakdown of the marriage, this couple had effectively nothing to show for the substantial earnings that Mr B had extracted from his businesses and spent, very largely, financing the mortgages on his two homes and financing his motor vehicle.
10. As well as being an expert in remediation, Mr B began in the mid-2000s to exercise an interest in property development. The two are related. His speciality is remediating what are sometimes known as brown field sites, former industrial sites, putting them into condition where they can be used for house building. In January 2007 a company operated by Mr B, [Company B], purchased such a former industrial site in Sandbach, Cheshire for £13 million. This was the year before the purchase of the matrimonial home. I am not going to set out the history of the transactions involving that site because they are detailed in the written evidence filed and, to some extent, in the Mazars' report.
11. The general scheme operated by Mr B in relation to property development has been that his companies would carry out the land remediation to get the site fit for house building and that the site, with appropriate planning consents, would be sold to a major house builder. He has repeatedly dealt with a well known national company Barratt, David Wilson. The Sandbach development in part was sold to that company in September 2011 and the project has reached the stage where houses built on it by Barratt, David Wilson are now being sold.
12. The business model is simple. The land is acquired with borrowed money. It is then sold on to a house builder allowing Mr B and his business associates, when he has them in a deal, to take a profit. The terms of the contract with the house builder may allow other future income streams, such as, firstly, on what is called overage which is any increase above a certain price per square metre of the finished dwelling and the second is by the company operated by Mr B retaining the freehold interest in the land and subsequently selling that to the purchasers of the houses, or selling it in blocks to a business that buys such interests in freehold. Of course the skill is two-fold; firstly, in having contacts with lending institutions or other providers of finance that will allow a deal to be set up in the first place and with developers and builders to purchase the land and, secondly, in doing the arithmetic and the negotiations to build into the structure of the project a sufficient profit to make it worthwhile.
13. On the face of it, Mr B's business affairs ought to be straightforward. That is the view of Mr Lewis, the author of the Mazars' report, and it is the experience of this court in dealing with cases involving similar transactions. Mr B's affairs, however, are not entirely straightforward. There has been a great deal of inter-company dealings and apparent mixing of finances between companies. The reason for that as a general principle is difficult to discern, although there are one or two transactions that I will have to look at in a little more detail.
14. Those acting for Mrs B make other fundamental complaints about the way in which Mr B has presented information both to them and to the court. Firstly, Mr B is accused of not disclosing to those acting for his wife, or to the court, all of his business dealings until such time as he was caught out and, only then, under protest; secondly, of deliberately placing finance out of the reach of the court to the detriment of his wife and, more particularly, in breach of undertakings that he gave to the court consequent upon a freezing order being made against him and his assets.
15. By the time the divorce proceedings were under way, Mr B was involved with a site at Chapel-en-le-Frith about which he was not forthcoming. At Christmas 2011 [Company C] signed an option to purchase a brown field site at Chapel-en-le-Frith. Through 2012 reports were prepared, plans drawn and a contract prepared for the sale of that land to Barratt, David Wilson. Planning permission was sought. A scheme was set up for Mr B's pension to be lent to [Company C]. Nothing was disclosed by Mr B about this transaction and proposed development, despite correspondence between solicitors about money matters. By chance, in February 2013, Mrs B's solicitors discovered in doing an internet search, Mr B's association with [Company C], a company of which he was the 100 percent shareholder but not a director, a company established immediately before the final separation and not included in the list of disclosed assets in his form E.
16. The first question I must ask is whether the failure to disclose anything about the company and about what it was up to was an innocent mistake. Or because Mr B thought there was nothing relevant to disclose. Or because he was hiding it? His explanation was that the decision to put the company into a name other than his own was to avoid an association with his failing businesses. His failure to disclose it was essentially explained by the fact that there was really nothing much to disclose but that, in any event, there was due to be extensive exchange of disclosable information within a short period after the moment that Mrs B chose to seek a freezing order and it would have been disclosed at that time had that process not been derailed by the freezing order process.
17. Am I satisfied that Mr B has given an accurate and reliable account of why, as opposed to the way in which he had done business in the past, he did not have himself as a director of a company of which he was the sole shareholder? I am afraid the timing of events around the establishment and activities of that business and his failure to disclose it at all until the time of the freezing order, suggest to me that I was not being given a reliable account. He says he was about to disclose it in the exchange of information that was imminent but I have seen no evidence to support that. The conclusion I have come to is that the failure to disclose this business was a deliberate and calculated move, designed to avoid any profit he made from the Chapel-en-le-Frith project being brought into account within his divorce proceedings.
18. It is clear to me that Mr B has taken the view that his activities post-separation should primarily be for his benefit, after he has discharged his liability to his four children.
19. What about the freezing order and its consequences? The discovery of the existence of [Company C] and its activities led to a without notice freezing order being made on 26^th February 2013. In his response to that freezing order, Mr B disclosed that the valuation of his profit from the Chapel-en-le-Frith project was thought by him to be between £1 million and £1.5 million pounds gross. Within a month of the freezing order and, plainly, something that was well under way, [Company C] signed heads of agreement in relation to land on another former industrial site in Preston.
20. On 8^th March 2013 the freezing order was discharged when Mr B gave undertakings to tie down his assets, contingent or real, plainly so that something could be preserved to be available within this litigation. What happened after Mr B gave his undertakings is, to my mind, highly instructive in my assessment of Mr B's bona fides.
21. [Company C] very shortly thereafter got into financial difficulties. It had made a payment of £150,000 to a business associate of Mr B's, a Mr Rainsford, for work unconnected with [Company C] but in relation to the Sandbach project. £30,000 was paid to a company, [Company D], operated by Mr B's girlfriend. £137,000 was lent to his girlfriend, said to be a direct consequence of the freezing order, because his girlfriend was concerned that, in amongst the pension provision that had been transferred into [Company C] along with Mr B's pension, was his girlfriend's pension. Although she had been awarded preference shares to reflect the value of her pension funds introduced, as indeed had Mr B, she was provided with a loan at the full value of her pension investment. She received value for her pension investment twice over. The effect was that [Company C] could not meet its ongoing liabilities. I have been taken to minutes of meetings with one of Mr B's business associates. Again, it is not necessary for me to refer to this in detail. However, the effect was that Mr B transferred £200,000 to another company, [Company E]. £200,000 in the control of Mr B within [Company C] going into [Company E], a company of which he owned but 50 percent. The totality of the transaction saw the assets of [Company C] transferred into [Company E], effectively diminishing by half the value of the projects to Mr B within [Company C]. The transaction to transfer the two projects to [Company E] and the transactions to transfer funds to [Company D], Mr Rainsford and [Company E], were all clearly in breach of undertakings given by Mr B.
22. His answer is to say that had he not taken those actions to keep his business projects alive everything would have been lost. It would either have been lost to his business associate in [Company E], Mr Hennessey, or it would have been lost because his businesses would have gone into administration. I am not persuaded by Mr B's explanations at all. I am satisfied that Mr B, having been rumbled as to the projects he had in [Company C], deliberately set about distancing himself from those projects. I do not know the full nature of his business relationship with Mr Hennessey but, on the face of the papers, Mr Hennessey has invested considerably more money into the business of [Company E] than has Mr B. Mr Lewis of Mazars has attempted to unravel these transactions with Mr Hennessey and [Company E]. He is clear he has not got to the bottom of it and I am not sure that I have either. What I am satisfied about however, is that the value that was in [Company C] remains available to Mr B despite it now residing within [Company E].
23. The effect of Mr B's decisions to hide his activities within [Company C] and then to distance himself from it in breach of his undertaking to the court, all lead me to the conclusion that he has set about this because he has something substantial to hide.
24. There was further uncertainty around Mr B's financial circumstances. It appears that, for some time since [Company A] went into administration, he has had no income and has not operated a bank account. He has lived by drawing funds from his businesses and building up debt in directors' loan accounts. He told me that Mr Hennessey had been generous, paying for trips to the Grand Prix at Monaco and for a holiday in the West Indies. I find it difficult to understand why Mr Hennessey should do anything of the sort. It is also clear that funds have been paid to Mr B's girlfriend and her business, [Company D]. His girlfriend's background is as a financial adviser. Mr B tells me and I have no reason to disbelieve him, that is was she who set up and organised the pension transfer into [Company C]. She is now in receipt of a regular salary from [Company E] and is said to be setting up arrangements for the raising of capital to fund future projects. I asked Mr B questions about her activities and he was able to give me no satisfactory answers as to just what it was she was doing that justified the payments to her. She is also on a commission arrangement whereby, if she did manage to arrange finance, she would collect 10 percent of the value of the finance she arranged. Given that the projects with which I have been referred to in detail have involved finance measured in teens of millions of pounds, if she is successful then, in addition to having been paid money up front, she will receive a very, very, substantial capital sum.
25. I have to say that the payments to his girlfriend and her business give all the appearance of payments made for the benefit of Mr B to allow him to continue to live and to meet his obligations. It is clear, in any event, from what he told me about their domestic arrangements that the funds paid to his girlfriend are applied as much to his benefit as to hers, as they pay for the rent on the house they occupy together.
26. Another factor which does Mr B little credit was his decision to reduce the support he was giving to Mrs B at a time when she was providing a home for his two youngest children and, in particular, Oliver. She too had been living in rented accommodation. Her rent was marginally less than the rent paid by Mr B and his girlfriend, yet Mr B systematically put his wife under pressure. When he discovered that she was pregnant to her boyfriend his payments effectively stopped, he using the excuse that she owed him money for garden furniture, an arrangement that on Mr B's account made little economic sense and was plainly an excuse to put his wife in financial difficulties.
27. In order to assess what there is in this case I have to look at the assets of Mr and Mrs B now and in the foreseeable future. I have to bear in mind how those assets have been acquired. Have I got reliable information to help me assess the value of Mr B's business interests? Mr Lewis of Mazars was given figures by one of Mr B's business associates, a Mr Stephenson. Mr Lewis' recalculation of those figures came to the conclusion that, when projects under way are concluded, Mr B will have had a distributable income of over £600,000. Similar calculations were done of Mr B's net worth, again based on figures provided by Mr Stephenson. Mr Lewis concluded on the basis of those figures that Mr B's net worth at the date of calculation was £147,000. The reason for those limited figures is that Mr B has substantial debt.
28. One of his debts which I need to deal with is a personal guarantee that he gave back in 2006. This was with The Royal Bank of Scotland in relation to a business known as [Company F]. That company has gone into administration leaving that debt behind. The Royal Bank of Scotland instructed solicitors to pursue Mr B but they have not done so. I was faced, on the Friday before the hearing started, with an application by Mrs B for detailed disclosure from The Royal Bank of Scotland of attempts by them to enforce the terms of the personal guarantee. Mrs B's case was that, as The Royal Bank of Scotland were not pursuing the debt and it was not being paid or serviced from any bank account, that Mr B must have an undisclosed bank account either in his name or somebody else's name that was servicing that debt. Mrs B accepted that the danger was that if the bank were alerted to this debt that could, of itself, cause them to pursue it in a way they appeared not to have been doing. Mr B's position was simple. There were no other bank accounts. The debt was not being serviced, nor was the debt being pursued. In the event, Mr B was vindicated and, given the fact that The Royal Bank of Scotland have failed to pursue this debt for a period of time now measured in years, I have no reason to think they will suddenly pursue it now.
29. There were other matters on which Mr B was accused of impropriety, or there was an implication of impropriety, where he was vindicated. A metadata file was provided in relation to what were the contracts for the sale of land. My understanding of that transaction demonstrated that there was no impropriety on Mr B's behalf. There was evidence given during the course of the hearing of inter-company transactions where what Mr B admitted to me were false invoices, ie invoices not being for the goods or services that appeared on the face of them, had been passing between businesses. There was an issue over VAT registration where, again, Mr B was vindicated. I mention all of those matters because I have taken them into account when considering whether or not I can believe Mr B on the matters where I have already indicated I have found against him. I am not persuaded that those matters are such as to mean that Mr B must be telling the truth about everything.
30. I am asked by counsel for Mrs B to draw adverse inferences against Mr B. It arises this way. If Mr B was prepared to go to the trouble of disguising his interest in [Company C], if he was prepared to breach his undertakings to the court then, in order for him to do all of that, there must be something worth putting beyond the reach of the court and beyond the inspection of those acting for Mrs B.
31. I was reminded of the authorities and, in particular, J-PC v J-AF [1955] P 215 and dictum cited with approval by the Court of Appeal in Baker v Baker [1996] 1 FCR 567. I was taken to the more recent case of NG v SG (Appeal: Non-disclosure) [2011] EWHC 3270 (Fam), where Mr Justice Mostyn drew together the approach from the previous authorities. He started by assessing that a court was duty bound to consider, by the process of drawing adverse inferences, whether funds have been hidden, with the immediate caveat that the court should not draw inferences that assets exist if assessment of the evidence leads to the conclusion that no such assets exist. Any such adverse inferences must be realistic and reasonable and based on some sort of evidence, whether that is direct evidence from documents or observations, or by looking at business activities and at lifestyle. Most important of all:

"The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told".

So that if the result of the order is unfair it should be unfair against the non-discloser and in favour of the party who was to have been deceived.

32. It is clear Mr B has retained debt and not discharged it. He appears to have access to income to spend without having a formal income stream. His investment in projects continues. He and Mr Hennessey continue to be on the look-out for business projects and, in my judgment, they are far more likely to get finance from the regular financial institutions than any other source. I accept that borrowing may be more difficult than it was prior to the recession but that does not mean that it simply is not there. Indeed, the history of Mr B's activities over recent years demonstrates that finance is available from regular lending institutions for projects where there is a profit to be made.
33. There is some money still to come from the Sandbach project. There is money to come from Chapel-en-le-Frith. There are the prospects for other developments with which Mr B is involved and there is the prospect of future projects that Mr B identified but was anxious to keep commercially quiet.
34. How then should I assess what Mr B has or is likely to have in the foreseeable future? I am satisfied that Mr Lewis has not been given complete information but only that which Mr B wants him to see. During the course of these proceedings Mr B said he was prepared to pay £350,000 for a home for Mrs B and the children. That level of provision is totally at odds with the picture painted to me. A proper offer in that sum was never forthcoming as it was to be at an unspecified stage in the future when Mr B had collected his profit. I do not believe he was offering Mrs B the whole of his net profit.
35. Having decided that I have not been given reliable evidence and that Mr B has manipulated the resources in his businesses to diminish them for the purpose of protecting them from Mrs B firstly because of her action in obtaining a freezing order and then because she became pregnant, then I have to take a realistic and reasonable stab at it. For these purposes I have concluded that, over the course of the next couple of years, Mr B is likely to have at his disposal, after he has paid his debts and discounting the debt to The Royal Bank of Scotland, net assets of the order of £1 millon. If I am wrong about that and he will have less then Mr B only has himself to blame.
36. He says he will be drawing income from [Company E]. He says that if he does that his interest in [Company E] will be reduced by the amount he draws by way of regular salary and that Mr Hennessey is likely to want a similar amount for himself, reducing the value that both of them have in [Company E]. I am not persuaded that Mr B's income will reduce the capital sum that I have alighted upon.
37. What then do Mr and Mrs B say I should do? When the case was opened, Mrs B sought a lump sum of between £750,000 and £850,000. In written closing submissions her counsel pitched her case at £650,000 broken down as to £350,000 for a house and £300,000 for a Duxbury fund based on £30,000 per annum for ten years. That was on the basis that Mrs B accepted Mr B's offer to pay £600 per month per child in child support.
38. Mr B agreed that this was a case where I should order a lump sum. His case was that it should be on a clean break basis and that all he could pay was, effectively, half of the £147,000 said to be his capital worth and that not payable until such time as he came into funds.
39. Has Mrs B got a claim for periodic payments? Mrs B now has an established relationship with another man. She was due to give birth to that man's child this month. They have been in a relationship for some time and this is the second occasion on which Mrs B has become pregnant. Mrs B has maintained a home either independently of her boyfriend or with her parents. They have not yet lived together and they plan to do so. Her case was that that relationship is, in reality, in its infancy, that they have not lived together and that her boyfriend is a long-term bachelor with no experience of living with a family and certainly no experience of living with Oliver who is a demanding child. Of course, as far as her new baby is concerned, Mrs B will have the protection of a potential claim under schedule 1 to the Children Act. She will have the potential to claim support for herself whilst looking after her boyfriend's child. All of those matters point in the direction of her having a very limited, if any, maintenance claim in her own right.
40. The other side of the coin is her responsibility to Oliver and her lack of real earnings for many, many years. The correct way to approach this, in my judgment, is to look at the totality of any lump sum in the context of this marriage, in the context of the capital position of the parties at the time of the breakdown of the marriage and my assessment of Mr B's assets going forward.
41. What of Mr B's arguments? Throughout the case, up until his wife became pregnant by her boyfriend, he was offering to provide her with a lump sum sufficient to re-house herself and the children, free from mortgage. The precise figure he was offering has diminished over time but, until she became pregnant, he acknowledged that he had an obligation to his children and that, if he provided her with a capital sum in order for her to re-house, that would be in exchange for a clean break. He is entitled to have taken into account the fact that some of his business activities have occurred post-separation. It is always difficult where a party to a marriage has long-term projects on the go to draw a line in the sand, whether it be at separation, decree nisi, decree absolute, final hearing of the financial remedy proceedings, or some other date when the husband is entitled to say, "These are now my earnings of which I am entitled to take the benefit". That is particularly so here where the Sandbach project, for example, goes deep into the marriage and where the [Company C] projects were designed to be hidden from view.
42. In my assessment Mr B was right when he was saying, earlier in the case, that his liability to his wife would be met with a capital payment to her of the order of £350,000. He never made an offer that could have been accepted because it was always a sum to be paid at some unspecified date in the future when funds allowed. In my judgment, taking into account all of those factors that I have just identified, £350,000 remains the correct lump sum. That will allow her to re-house if she finds herself having to provide a home for the children of this marriage whilst on her own. She would have a claim in respect of support for looking after her new baby from that child's father.
43. Doing the best I can on the basis of the information as to when funds are likely to come in, my assessment is that that sum should be available to Mrs B no later than July 2016. The question arises as to whether there should be any provision in the meantime. I think there should be. Mr B has to have encouragement to pay his wife. If he can raise funds from some other source to pay her out then he should do so. If he cannot then he should make a payment on account, that payment on account being £2,000 per month.
44. The next difficulty that I have to identify and grapple with is the incidence of costs. Mr B has been represented throughout the bulk of these proceedings and has incurred costs of £60,000. My understanding is that that has been paid. Mrs B initially sought access to the £16,000 from the proceeds of sale of the matrimonial home. That was the subject of satellite litigation. She has subsequently been able to obtain a litigation loan but the grand total of her costs, ignoring the costs of previous solicitors, is some £240,000. She seeks her costs on an indemnity basis.
45. I must remind myself that in considering the question of costs I must apply the family procedure rules, rule 28.3. I must consider the interface between the family procedure rules and the civil procedure rules on costs. I must be clear in analysing why it is that the costs are what they are. I must assess what it is appropriate, if anything, for Mr B to pay and I have specific matters to consider when I am considering indemnity costs.
46. Let me start at the beginning of that process. The starting point in financial remedy proceedings is that both parties are responsible for payment of the costs that they incur in fighting their case. Only if there is some reason related to the way in which the litigation has been conducted should I depart from that. I am quite satisfied of two things. Firstly, there would have been a considerable expenditure of costs, come what may, investigating Mr B's financial affairs. His affairs were never simple during the course of the marriage. Mrs B had the benefit of the complexity of his affairs and its ability to generate cash to support the standard of living that they, as a family, enjoyed. The reverse side of that coin is that, on separation and divorce, the investigation will inevitably be complex and difficult. It seems to me that Mr B having had legal representation through much of this, it would be unlikely that Mrs B's costs, even had this matter compromised at a relatively early stage, been much less than the £60,000 that Mr B incurred in costs. Indeed, given that she was bringing the claim, it is likely that her costs would be higher. But had Mr B given timely disclosure of everything that was going on as opposed to trying to hide his affairs, the case would have been ready to settle at an earlier stage. I am persuaded that, for this purpose, £60,000 is an appropriate sum to deduct as to the costs likely to have been incurred come what may. I am told that Mrs B incurred some costs prior to the instruction of her present solicitors. I am, therefore, going to reduce that figure to £50,000.
47. That leaves £190,000 in costs that are, potentially, the subject of an adverse costs order and, potentially, the subject of an indemnity costs order. I have been helpfully referred to the authorities on indemnity costs. In Wailes v Staplion Construction and Commercial Services Limited [1997] 2 Lloyds' Rep 112 Mr Justice Newman said this:

"In summary the position appears to be that where there are circumstances of a party behaving in litigation in a way which can be properly characterised as disgraceful or deserving of moral condemnation in such cases an order of indemnity costs may be appropriate."

Mrs Justice Eleanor King in M v M [2013] EWHC 3372 (Fam) adopted the phrase attributable to Lord Justice Waller in Excelsior Commercial and Industrial Holdings Ltd v Salisbury Ham Johnson [2002] CPRep 67 that:

"The question will always be: is there something in the conduct of the action or the circumstances of the case which takes the case out of the norm in a way which justifies an order for indemnity costs?"

48. I have to assess whether this is such a case that takes it beyond the norm and where an order for costs, either assessed by me or subject to assessment by a costs judge, is insufficient to mark the bad behaviour of Mr B in not disclosing his assets. The consequence of any amount of costs not awarded against Mr B will be, of course, that it comes from the lump sum that Mrs B receives, as and when she receives it. It seems to me I must look at all these matters in the round. I am not satisfied that this case requires indemnity costs.
49. I have looked at the information I have been provided on the schedule. It seems to me that the amount of costs that Mr B ought properly to pay to meet the need to mark his bad behaviour in an appropriate way is in the sum of £150,000. There is, therefore, a total of £500,000 to be paid by Mr B.
50. Mr Dyer when he opened the case said that he was going to invite me to appoint a receiver to administer Mr B's financial affairs. I am not persuaded that it is appropriate for me to deal with that proposition without it being made formally with a proper case to back it up, with Mr B given an appropriate opportunity to respond. The costs order is payable within 14 days unless I order otherwise. I am told Mr B does not have £150,000 if the information given to Mr Lewis at Mazars was correct. I have found that it was not correct. I am prepared to give Mr B six months to raise that money.
[Judgment ends]