England and Wales High Court (Family Division) Decisions

IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

		Royal Courts of Justice Strand WC2A 2LL
		3rd December 2015

HIS HONOUR JUDGE BOOTH:

1. The applications before me today concerns the affairs of Mr H and Mrs H. Mr H has been represented by Mr. Trowell QC and Mrs. H by Mr. Thorpe.
2. The background to the matter can be stated very shortly. Mr. and Mrs. H married in 1982. They have four children, who, apart from the youngest (who is at university) and the second eldest (who is towards the end of her medical qualifications), are independent. Sadly, they have agreed that their marriage is at an end. They have been married a long time. Mrs. H is in her mid-fifties. Mr. H approaches his sixtieth birthday, when he will retire.
3. They have been financially successful during the course of their marriage. Mr. H's employment has taken them to the United States and into Europe. They have homes in Surrey, Ireland and Florida. Everything that they have acquired they have acquired together during the course of their marriage.
4. If their divorce proceedings are resolved in this jurisdiction there is every likelihood that the end result will be that they have broadly equal financial provision to allow them both to live very comfortably for the rest of their lives and for each of them to be able to make, if they choose to do so, substantial provision for their children.
5. They are represented by lawyers from the first rank. That is a reflection of their wealth. It is also a reflection of the fact that disentangling their affairs will not be entirely straightforward.
6. Mr. H's pension is based in the United States of America. It may not be susceptible to an effective pension sharing order within this jurisdiction. I can readily see that there will be significant tax consequences of a redistribution of the assets that they have.
7. There is, at the moment, no definitive figure for their worth, but it is perhaps of the order of £8m (as suggested in the paperwork). Mr. Thorpe, in submissions, suggested it was nearer £10m. As I have already said, wealth on that scale means that neither will fail to be comfortable.
8. For reasons which really do not matter, both Mr. and Mrs. H have attempted to start litigation over the ending of their marriage: Mrs. H in courts in England and Wales; Mr. H in the courts in Ireland.
9. The question has arisen over which court was first seized. That was determined yesterday in the High Court in Dublin. Mr. Justice Abbott determined that the Court of England and Wales was first seized in relation to the dispute between Mr. and Mrs. H. He, therefore, stayed Mr. H's Irish proceedings. That question has now been answered.
10. Mr. H has a limited period of time to consider whether or not he should appeal.
11. The issue before me is whether I should countenance any further orders within the English divorce proceedings pending either the expiration of that period of time for appealing or pending the determination of an appeal (if one is lodged within time).
12. I have been referred to a number of authorities which do not quite meet the point. Moses-Taiga v Taiga [2005] EWCA Civ 1013 makes plain that the jurisdiction to make orders for maintenance pending suit is available to this court whether or not there is an appeal, so long as the proceedings in this country are not stayed.
13. The question then is whether I should exercise that jurisdiction (which is Mr. Thorpe's position) or whether I should adjourn today's hearing to await Mr. H's decision on whether he appeals and, if he does, the determination of that appeal (which is Mr. Trowell's position).
14. In my judgment, the interim financial position between Mr. and Mrs. H requires intervention.
15. The purpose of maintenance pending suit is to deal with an interim position on a broad-brush basis, providing a fair outcome, the test being what "… the court thinks reasonable" – section 22 (1) Matrimonial Causes Act 1973.
16. Both parties have filed evidence about their financial position. Mr. H filed extensive evidence within the Irish proceedings of his financial position.
17. At the moment, the parties' finances remain enmeshed. There are some expenses that are met through Mr. H's employer. There are a number of expenses that are met directly by Mr. H. There are further expenses that are met from a joint account which is exclusively operated by Mrs. H. Mr. H currently pays sums into the join account for Mrs. H's use, into an account in her sole name, for her use, and into an account in America, for her use.
18. The position is not entirely clear, but the end result appears to be that Mr. H currently pays (subject to dollar/sterling exchange rates) £5,550 for the direct use of Mrs. H, split between the three accounts.
19. His proposal effectively amounted to a reduction in the amount he paid, but with some redistribution of who paid what in terms of their existing commitments.
20. Mrs. H seeks an increase to £7,750 per month on the basis that the existing payments continue to be made as they are, thus providing her with an additional £2,200 per month at her disposal.
21. Separate - but related - is how Mr. and Mrs. H are going to pay for their lawyers. So far, all the lawyers have been paid by funds under Mr. H's control. He agrees that, in the event that he does appeal in Ireland, he will meet Mrs. H's costs of resisting that appeal. Within the proceedings in this country he accepts that he will pay the costs that she has incurred to date. He also accepts that he will have to pay the costs that she will incur as the financial remedy proceedings go through the First Appointment and Financial Dispute Resolution stages. He seeks time to pay and seeks a delay in payment, particularly of the costs associated with the FDR.
22. I have been addressed on the question of whether bonuses paid to Mr. H ought to be classified as income for the purposes of my assessing what he has at his disposal on a month-by-month basis or whether (as Mr. H would like me to) I treat it as accumulated capital that will, in the future, apply primarily to meet his and Mrs. H's costs.
23. The courts are increasingly familiar with the complex ways in which senior executives are remunerated by companies based around the world. Precisely how a fund that is paid to Mr. H is categorised - whether it be called a 'bonus' or whatever else - is largely irrelevant. The test is always whether it is available to be spent.
24. The court will usually look at the history of the matter to see how the parties have spent what has been received in the past. It will also look at the present and the future to see those expenditures that will need to be met from now on.
25. Absent his bonus, Mr. H has in excess of £18,000 per month to spend. If the bonus is factored in he obviously has more. He is currently on garden leave and will not be required to carry out any further work until he retires. His current remuneration will continue until retirement at age 60.
26. Mr. Thorpe relies on Mr. H's continued expenditure on holidays as evidencing the fact that he has access to more spending power than Mrs. H has as (absent equivalent holidays for her) she has managed to get into debt.
27. I must take a broad overview at the maintenance spending suit stage. No authorities have been cited to me as being helpful in guiding my exercise of discretion on the facts of this case.
28. As I have indicated the likely outcome of this case within this jurisdiction is that these parties are going to find themselves in broadly similar financial positions at the end of the divorce process. It is clear to me they are not, at the moment, in anything like broadly similar financial positions.
29. In my judgment, in this case it would be reasonable to bring them closer. Mr. H should be paying more, but I bear in mind that he is meeting from resources under his control all of the legal costs and potentially - if he chooses to go down that route - further legal costs in Ireland.
30. At some stage Mr. and Mrs. H will have to negotiate a separation of their detailed finances of who pays what, where and when. It is not appropriate to start on that process today. Nor do I feel I have a sufficient grasp of the detail to know whether I would be improving the position or making it worse.
31. The conclusion I have come to is that, whilst these proceedings continue, maintenance pending suit and thereafter if there is a decree, interim periodical payments should include an additional sum of £2,000 per month on top of what is already being paid.
32. If Mrs. H does not need to spend that money, she will accumulate it. If Mrs. H spends it extravagantly, that is no doubt something that will be taken into account in due course. But it seems to me she is entitled to have rather more discretion in her expenditure than she currently has.
33. As far as the costs are concerned, I am not at all attracted by the idea of Mr. H maintaining a degree of control of Mrs. H's lawyers' fees by drip feeding payments them.
34. Part of what I am seeking to achieve (and what I regard as a reasonable position at the moment) is for Mrs. H to have her own independent finance, which includes her legal fees. I am, therefore, going to require Mr. H to pay the £65,000 that has been assessed as the likely costs of Mrs. H by way of a lump sum within 21 days.
35. I am satisfied as Mr H effectively concedes that there is, at the moment, no other source of funding available to her. It is clear from the letter written by potential litigation loan lenders that they were not making an offer of funds, but they were making an offer to consider the position further in the future. So I am satisfied that the legal test is met for the making of a legal services order under section 22ZA Matrimonial Causes Act 1973.
36. As far as the Divorce suit is concerned, in my judgment, the obligation to take action should lie with Mr. H. If he chooses to appeal, then I would expect him to be writing to the Family Court in Bury St. Edmunds advising the court of the steps he has taken in Ireland and inviting the Family Court here to postpone the listing of the decree nisi. If he takes all of those steps, that is what I would expect to happen.
37. The next matter I need to consider is the further progress of the financial remedy proceedings, which are due before the Central Family Court on the 15^th of this month.
38. Mr Trowell submits that it is impossible for Mr. H and those who instruct Mr Trowell to put together a compliant Form E containing all the information required along with the necessary documentation.
39. I find it surprising that the Form E itself is incapable of being filled in, given that all of the information that I would expect to see on a Form E has been provided in statement form within the Irish proceedings. Technology which allows copying and pasting from one document to another would seem to me to make that the work of a moment. I can well see that the provision of documentation may be more problematic.
40. Mr Trowell submits that to require his instructing solicitor and Mr. H to attempt to put together a Form E which simply cannot be done is to condemn the parties to a wasted visit to the Central Family Court, where there can be no effective First Appointment; where there can be no preparation of questionnaires; no determination of what or what should not be answered; no opportunity to give further directions to send this case on its way to an effective Financial Dispute Resolution in due course.
41. Save for the complications I identified at the start of this judgment, Mr. and Mrs. H's finances seem relatively straightforward. Save perhaps for pension and tax advice, I would have thought it highly unlikely that there would be any need for the instruction of expert witnesses. I would have thought that the directions emanating from a First Appointment would be relatively straightforward.
42. In my judgment, Mr. and Mrs. H would be better served by the momentum of these proceedings being maintained rather than losing time. It is obviously in both of their interests (also in the interest of their adult children) that they resolve their difficulties sooner rather than later. They have not got off to a good start.
43. In my judgment, that objective would be better served by maintaining the First Appointment on 15th December. Those advising Mr. H must do their level best to produce a Form E, and to produce it with as much documentation as they can. If it is missing documents, then no doubt they can explain why. They can also explain how quickly those documents can be provided.
LATER
44. Mrs. H seeks her costs of today. They are claimed in the sum of £18,000. I am asked to make a summary assessment (if I decide any costs should be payable).
45. First of all, I need to consider the starting point. There are three potential starting points: there is the general rule in financial remedy proceedings that there are no orders for costs; to some proceedings the Civil Rules apply, with a starting point that the winner is entitled to their costs; there is a third position - which is the correct one attributable to maintenance pending suit and costs allowances - which is that the court starts with a blank sheet of paper.
46. In deciding where to go from that blank sheet of paper I obviously have to take into account all of the matters set out in the Family Procedure Rules and the Civil Procedure Rules.
47. Family Procedure r.28.3(7) I must have regard to:

(a) any failure by a party to comply with these rules, any order of the court or any practice directions the court considers relevant;

(b) any open offer to settle made by a party;

(c) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(d) the manner in which a party has pursued or responded to the application or a particular allegation or issue;

(e) any other aspect of a party's conduct in relation to proceedings which the court considers relevant; and

(f) the financial effect on the parties of any costs order.

48. How I impose any cost order is governed by the Civil Procedure Rules. At Part 44 there is a menu of costs orders that I can choose from. Part 44.3 deals with the basis of the assessment. Part 44.4 lists factors to be taken into account in deciding the amount of costs.
49. A complicating factor is that I have made a legal services order, whereby funds currently under Mr. H's control are to be transferred to Mrs. H's solicitors to meet her costs to the Final Dispute Resolution stage.
50. Given that these are (as yet) undistributed funds between Mr. and Mrs. H and given that I have indicated the likely outcome is that they will be put in a broadly similar position at the end of this process, the funds going to meet Mrs. H's costs are half hers and half Mr. H's and the costs that Mr. H has spent on solicitors are half hers and half his.
51. What this boils down to is whether there should be a penalty on Mr. H because (absent something that justifies him being penalised in costs) there is no reason, it seems to me, why I should be making any costs order at all.
52. Mr. Thorpe suggests that I should look at whether it was reasonable for Mr. H to contest the matters before the court today and to reach a conclusion that it was unreasonable for him to contest those matters on the basis that he has been ordered to pay more by way of maintenance to Mrs. H than he was prepared to pay and he has been ordered to pay upfront costs that he was prepared to pay but wanted to pay over a period of time.
53. Of course, if I do decide that there should be some sort of penalty, I must then look at the financial effect on the parties of any costs order.
54. Insofar as it is paid from undistributed funds, if I order Mr. H to pay money to Mrs. H in respect of her costs, she would be paying half of it herself. If I order that be paid (as Mr. Thorpe has suggested) at the end of the case (after funds have been distributed), then if I were to order Mr. H to pay the whole of Mrs. H's costs she would not only be restored with her £18,000, she would be £36,000 better off than Mr. H.
55. My conclusion is that these proceedings should not have been contested. Both parties should have made moves, one towards the other, to resolve this. Mr. H's position was more unreasonable than Mrs. H's (as has been evidenced by the outcome). I think it right that that is marked in some way.
56. Bearing in mind all the factors I have outlined and bearing in mind this would have to be collected post the final distribution between the parties, then my assessment is that the appropriate amount for Mr. H to pay Mrs. H is £5,000 inclusive of VAT.