Jersey Unreported Judgments

[2006]JRC112

royal court

(Family Division)

1^st August 2006 

Before     :

M. C. St. J. Birt, Esq., Deputy Bailiff.

 

 

Advocate V. Myerson for the Petitioner.

Advocate A. J. Clarke for the Respondent.

judgment

DEPUTY bailiff:

1.        This is an appeal by the respondent ("the wife") against an order that the petitioner ("the husband") should pay only £4,500 towards her costs in respect of the proceedings for ancillary financial relief before the Deputy Registrar.  She contends that the husband should have been ordered to pay the costs of the financial relief application. 

2.        The parties were married in 1996.  They lived together in Jersey until 2000 when they relocated to England where they separated in 2003.  There are no children of the marriage.  At the time of the decision of the Deputy Registrar, the wife was aged 60 and the husband aged 70. 

3.        The decision of the Deputy Registrar as to ancillary relief was given on 28^th October 2005.  In short, she ordered that -

(i)        the husband should pay the wife a lump sum of £20,000

(ii)       he should pay arrears of maintenance in the sum of £6,100

(iii)      he should pay ongoing maintenance of £450 per month reviewable annually in accordance with the increase in the cost of living index. 

4.        Prior to the hearing, the open position of the husband had been that there should be no lump sum and no maintenance on the basis that the parties had shared the proceeds of sale of their English property in a fair manner between them and no further adjustment of either income or capital was required. 

5.        The wife, on the other hand, in her open position, stated that there should be a lump sum of £143,500 made up as to £81,000 as equalisation of the capital imbalance between the parties, £53,500 as capitalised future maintenance and £9,000 as arrears of maintenance. 

6.        According to Mr Clarke - and this was not disputed by Miss Myerson - the capitalised value of the future maintenance ordered by the Deputy Registrar is £51,300, applying the Duxbury tables.  In essence therefore, the wife was successful in respect of future maintenance (albeit in income rather than capital form), broadly successful in respect of arrears of maintenance and only successful in respect of a lump sum as to £20,000 rather than £81,000.  The capitalised value of what she received was £77,400, i.e. approximately 54% of the amount she claimed.

7.        In her judgment dealing with ancillary relief, the Deputy Registrar found that the husband had been guilty of litigation misconduct, in that he had failed to make prompt and proper disclosure of his financial position, which had led to increased costs.  Indeed, the Deputy Registrar went so far as to say in her judgment that she was still not satisfied that all his assets had been disclosed. 

8.        In her judgment dealing with costs, she referred to a comment in B v C [2005] JRC 169 and found that, but for the husband's litigation misconduct, the correct order was no order as to costs.  She then assessed the amount which the husband should pay to reflect his litigation misconduct at £4,500, which was the order she then made. 

The grounds of appeal

 

(i)         Failure to exercise discretion

9.        The reasons given by the Deputy Registrar for holding that, subject to litigation misconduct, there should be no order as to costs are contained in the following passage of her judgment -

"I was referred to the case of B v C [2005] JRC 169 where the Court states that -

'As to costs this is a case where neither party has obtained all that was asked for and the Court has come down between the parties' respective positions.  We think therefore that, in principle, there should be no order as to costs.'

In principle, therefore, there should be no order as to costs."

10.      Mr Clarke submitted - and Miss Myerson conceded during the course of the appeal - that it appears from this passage that the Deputy Registrar felt bound to make no order as to costs because she extracted from B v C a principle to the effect that there should be no order as to costs where neither party had obtained all that was asked for and the Court had come down between the parties' respective positions.

11.      As the author of the judgment in B v C, I must accept full responsibility if the passage is potentially misleading.  However, the passage quoted by the Deputy Registrar omits the words which followed and which place the quoted remarks in context.  The full passage - with the omitted words underlined - is as follows -

"As to costs this is a case where neither party has obtained all that was asked for and the Court has come down between the parties' respective positions.  We think therefore that, in principle, there should be no order to costs. However we accept Mrs Colley's submission that the husband's repeated failure to comply with the various orders for discovery has added to the wife's costs.  In the circumstances the Court orders the husband to contribute £10,000 towards the wife's costs".

12.      In our judgment, the Court was not purporting in B v C to lay down any general principle.  What it was saying was that, on the particular facts of that case, the appropriate order would have been no order as to costs save for the litigation misconduct by the husband in failing to comply with orders for discovery.  It might perhaps have been more exact to use words along the lines ".....were it not for what follows" rather than "in principle". 

13.      Both counsel accepted that the Deputy Registrar was unfortunately misled by this extract and appears to have considered that she had no alternative but to make no order for costs, subject to the litigation misconduct issue.  In my judgment, she thereby fell into error.  The question of costs is a matter of discretion and although on some occasions, when the Court comes down between the parties' respective positions, it may be appropriate to make no order for costs, there will be many others where it is still appropriate to order one or other party to pay all or some of the costs (e.g. J v M [2002/127] - Jersey Unreported). In the light of the finding that the Deputy Registrar did not exercise her own discretion, I must now do so.  However, before then, I must comment upon certain other submissions made by Mr Clarke. 

(ii)        The wife was the 'winner' and should be awarded costs

14.      Mr Clarke referred to Watkins v Egglishaw [2002] JLR 1 which sets out helpful guidance for deciding questions of costs in civil cases.  Mr Clarke argued that, if one could identify a 'winner' then costs should be awarded to that party.  However, I agree with Miss Myerson that the Court adopts a rather more flexible approach in matrimonial causes.  Thus, in the English case of Gojkovic v Gojkovic (No 2)[1992] 1 All ER 267 the headnote reads -

 "Although the award of costs in the Family Division prima facie followed the event, as in other divisions of the High Court, that presumption was displaced more easily than in other divisions and might be affected by the behaviour of a party in failing to disclose material documents or assets, the incidence of legal aid and the inadequacy of available assets, especially if children were involved."

Butler-Sloss LJ elaborated this at 271 in saying -

"In many cases, the incidence of costs has a marked impact upon the availability of sufficient funds for the needs of the family.  It may substantially diminish the cake which has to be cut.  In some cases those costs are specifically allowed for in the substantive orders made.  The ambit and extent of the discretion of the court is consequently, and rightly, far wider than in other civil proceedings".

This approach has also long been adopted in this jurisdiction.  Thus, in J v M Bailhache Bailiff said at para 2 -

"While the ordinary rule that costs should follow the event is an important consideration it must be subordinated, in my judgment, in this type of case to the need to do justice between the parties."

15.      I will revert to this aspect when I come to the exercise of my discretion.

(iii)       Is legal aid relevant?

16.      In the penultimate paragraph of her judgment on costs, the Deputy Registrar specifically had regard to the fact that the husband was a legally aided litigant.  Mr Clarke submitted that she should not have done so. 

17.      In my judgment, the fact that a litigant is legally aided may be a relevant factor in some cases.  Thus, the headnote in Gojkovic referred to earlier, states that the incidence of legal aid may be relevant.  In L v B [2004] JRC 054 Bailhache, Bailiff specifically took into account the fact that both parties were legally aided when deciding to make no order as to costs.  Similarly, in W v O [2005] JRC 017A Obbard, Registrar also took into account the existence of legal aid.  In some cases the fact that a costs order would deplete the assets available to the paying party and would benefit only the receiving party's lawyer, (rather than the receiving party) will be a relevant factor.

18.      This is not to say, of course, that the existence of legal aid will invariably be relevant.  It will all depend upon the circumstances.  Certainly, the fact that a party is legal aided should not protect that party from a costs order if his or her conduct (e.g. unreasonably rejecting offers, failing to make discovery etc.) has contributed to the costs incurred by the other side.  Indeed, in the present case, the fact that the husband was legally aided did not prevent the Deputy Registrar from making an order against him in respect of his litigation misconduct.  I see nothing wrong in her taking into account the fact that he was legally aided when having regard to the quantum of such an award. 

(iv)    The Deputy Registrar should not have fixed the amount of costs

19.      Mr Clarke submitted that, assuming the Deputy Registrar had concluded that the husband should pay the extra costs incurred as a result of his litigation misconduct, she should not have summarily fixed the quantum of those costs.  She should either have referred the matter for taxation (so that a detailed analysis could be carried out as to the extra costs incurred by the wife as a result of the misconduct) or she should have taken a broad view and fixed a percentage of the costs as being attributable to such issue. 

20.      In support for this proposition, he relied upon Luce v Manning [2004] JLR 64.  But that case was very different.  There the Master had decided in principle to award the plaintiff his costs but had then limited those costs to £750.  The Court held that he should not have done so and that the reasonableness of the plaintiff's costs, having regard to the small amount at stake, should have been dealt with upon taxation. 

21.      I have no hesitation in rejecting Mr Clarke's submissions for two reasons -

(i)        It is quite common for a court, when making a costs order, to 'carve out' a particular aspect from the general award either by depriving a successful party of some of his costs or by ordering a party to pay the costs of that issue.  It would be highly undesirable if the Court could not adopt a broad brush approach on such matters either by assessing a percentage or by awarding a specific sum.  Taxation can be an expensive process, requiring much time to be spent on a detailed trawl through the files.  It would not be in the interests of justice, particularly in a case involving modest sums, to put the parties to substantial expense simply in order to work out the exact amount of costs attributable to the issue which has been carved out. On the contrary, it seems infinitely preferable for the court which has heard the case and which is therefore familiar with the issues, to make an immediate award having regard to the particular circumstances.  Such award may be expressed as a percentage or as a fixed sum. The position is quite different from that in Luce v Manning, which was giving a general award of costs with one hand but then taking it away with the other by fixing a very small sum.

(ii)       An award such as this (to reflect litigation misconduct) is not intended merely to be a pound for pound award of the extra costs incurred by one party as a result of the litigation misconduct of the other.  It is also intended to act as a form of sanction for the misconduct with a view to deterring others from like conduct.  Accordingly, there is no need for there to be an exact correlation between the sum awarded and the extra costs in fact incurred as a result of the misconduct.  A broad approach is appropriate. 

22.      In my judgment, as in B v C (supra) it was perfectly proper in this case for the Deputy Registrar to award a fixed sum when 'carving out' this particular aspect of the case to reflect the litigation misconduct. 

Decision

23.      Miss Myerson submitted that there were four areas where the wife should pay the husband's costs. 

(i)        She was ordered to pay the costs incurred in connection with the decree nisi.  These came to £1,528.

(ii)       The wife applied to raise marital misconduct as an issue in the ancillary proceedings before withdrawing that application in April 2005.  The resulting costs incurred by the husband  were said to amount to £1,239.

(iii)      The wife raised the question of whether Bailhache Labesse had a conflict of interest in acting for the husband on the grounds that his daughter was employed there.  This was not proceeded with and the costs attributable to it are said to amount to £1,119.

(iv)      The wife applied for maintenance pending suit after the decree absolute.  The application was therefore ill-founded.  The husband's costs in that connection were said to amount to £1,369.

These four sums total £5,335, although it must be borne in mind that they are simply estimates by the husband's advocates of the time which they have recorded and have not been subject to taxation.  Miss Myerson said that the husband had decided not to proceed to collect the divorce costs in the sum of £1,528 from the wife but submitted that all four sums should be set off against any amount which the Court might otherwise order the husband to pay.

24.      In my judgment, subject to the litigation misconduct issue, a fair order in this case is that determined by the Deputy Registrar, namely no order as to costs.  My reasons briefly are as follows -

(i)        This is a case where, in broad terms, the decision of the Deputy Registrar was midway between the parties' respective positions.

(ii)       This is not a case where there are substantial assets, and the effect of any costs order must therefore be considered in that light.

(iii)      The aim of the Deputy Registrar's position was to achieve broad parity between the parties.  Their financial positions are therefore not materially different from each other after allowance of the award, albeit that the husband has greater liquid assets and the wife has greater property assets. 

(iv)      To the extent that the husband has greater liquid assets and is in a better position to pay costs and to the extent that the outcome was slightly closer to the wife's position, this can be said to be offset by the four matters referred to at paragraph 23.

25.      However, I agree entirely with the Deputy Registrar that an award of costs against the husband is appropriate in order to reflect his failure to give proper disclosure.  In my judgment there is an important public interest in ensuring that full and prompt disclosure of assets is made by parties involved in matrimonial proceedings.  Injustice may result if a party is able to conceal assets or forces the other party to run up substantial legal costs in obtaining proper disclosure.  It is important therefore that any award of costs to reflect a failure to make proper disclosure is sufficient to bring home not only to that party but also to future parties who may be tempted to act in the same manner, that there is a price to be paid for such conduct.  Given the Deputy Registrar's finding that she was not satisfied that all his assets had been disclosed, I consider that an award of £4,500 was insufficient to achieve this objective.  I was advised that the wife's total costs amounted to approximately £50,000, although this amount would no doubt be reduced quite substantially on taxation.  

26.      Had the appeal proceeded in the ordinary way, I would not have interfered with the Deputy Registrar's decision, even though I would myself have awarded a greater sum.  But, given that, for the reasons mentioned earlier, I am exercising my own discretion afresh, I consider that a sum of £10,000 is more appropriate to reflect not only the extra time and expense incurred on behalf of the wife as a result of the litigation misconduct, but also the importance of making disclosure which is both timely and full and frank.  I therefore order the husband to pay £10,000 towards the wife's costs.

27.      To that extent, I allow the appeal.  Counsel agreed that, as both parties are legally aided for the purposes of this appeal, there should be no order as to costs no matter what the outcome of the appeal.  Accordingly, I make no order in relation to the costs of the appeal.

Authorities

B v C [2005] JRC 169.

J v M [2002/127] - Jersey Unreported.

Watkins v Egglishaw [2002] JLR 1.

Gojkovic v Gojkovic (No 2)[1992] 1 All ER 267.

L v V [2004] JRC 054.

W v O [2005] JRC 017A.

Luce v Manning [2004] JLR 64.