[2010]JRC043A
royal court
(Samedi Division)
24th February 2010
Before : |
V. J. Obbard, Registrar, sitting alone. |
Between |
A |
Peteitioner |
And |
B
|
Respondent
|
IN THE MATTER OF O
Interim Maintenance to fund wife's legal fees
Advocate M. E. Whittaker for the Petitioner.
Advocate D. Gilbert for the Respondent.
judgment
the registrar:
1. The wife's petition for divorce in this case was filed in April 2009. Prior to that, in 2002, the parties had signed a separation agreement which, I am told by the husband's advocate, was intended to be a "clean break" settlement of all ancillary matters.
2. These are my reasons for ordering the husband to contribute the sum of £2,000 per month to the wife's legal fees, at least until the wife's challenge to the validity of that agreement is heard by the Inferior Number and possibly until a final order on ancillary matters is made.
3. The wife's application for a contribution to her legal fees is succinctly set out in her "open position":-
(i) Under the principles set out in S-v-C [2003] JLR N 24 a contribution towards the wife's legal costs may be included in an order for maintenance pending suit and the matter is in the discretion of the judge;
(ii) the petitioner has made a claim for ancillary relief which includes inter alia the matter of maintenance pending suit, spousal maintenance and lump sum payments;
(iii) the application of the petitioner for ancillary relief is resisted by the respondent and certain preliminary matters have been referred to the Royal Court;
(iv) the present position is that the petitioner has declared net annual income of £21,983.92. The petitioner has no capital realisable assets other than her home which is shared with the four adult children of the marriage. She has debts in the region of £20,000 which debts are accruing as a result of a shortfall between her income and her outgoings. She is still supporting certain of the children to a limited extent due to their particular circumstances;
(v) the respondent has assets valued in excess of £4,150 000 which includes a large amount of cash in the bank (over £563,000). The respondent has declared a gross annual income in the region of £85,000 to £90,000. He has no dependants;
(vi) costs have therefore increased and will continue to increase to a level that the petitioner is unable to fund from her present resources at the present time without borrowing. The amount available to her by way of a bank loan is limited. She would find it difficult to service the loan in any event, given her level of income;
(vii) the petitioner is therefore at a considerable disadvantage in pursuing her claim for financial relief;
(viii) the respondent has sufficient resources and income that he would be able to afford maintenance pending suit;
(ix) there is no prejudice to the respondent that cannot be dealt with under any final order.
4. The respondent disputes the wife's claim for a contribution to her legal fees. He seeks to distinguish this case from the principles set out in S-v-C [2003] JLR N 24 referred to by the wife. This is a summary of his open position:-
(i) the Court will first have to determine the preliminary issue of whether the wife is entitled to make an application for ancillary relief. It is not yet known that a lump sum or spousal maintenance order will be made, so he argues that it is unfair to make him contribute to her fees at this stage;
(ii) the wife could apply for legal aid and she may obtain a certificate;
(iii) there are many experienced family lawyers who do legal aid work. If she applied, it is possible that she could be given a lawyer at the same firm which presently acts for her;
(iv) the wife owns an unencumbered property which she could charge in order to fund her legal fees;
(v) the wife could make payments of up to £930 per month to her lawyers for fees by making simple economies, such as reducing her holidays abroad and other personal expenditure;
(vi) there could be a real prejudice to the husband if he is obliged to pay the wife's fees for the preliminary hearing, and the wife is unsuccessful at that hearing;
(vii) the wife should be obliged to show that the case has an element of "complexity" or "unusualness". It is argued that this is not such a case.
5. The case of S-v-C [2003] JLR N 24 was referred to by both parties. Paragraph 14 of the full judgement [Unreported 26th June 2003] reads as follows:-
"We accept that orders of this nature should not be made in the ordinary case. They should be reserved for those cases which are of such complexity or where there are circumstances which for other reasons are so unusual that there is a real risk of the wife (and it is usually the wife) being unable to put forward her best case with equality of arms unless the order is made."
6. The wife's case relies principally on the apparent imbalance of present assets and income in the husband's favour. In other words, he has several properties and income which she does not have. The husband criticised the asset summary attached to the bundle, but, if I accept in general terms the summary as presented, this is the situation. The wife owns a property worth £585,000, whereas the husband owns 3 sites worth in total £3,565,000. She owns a bank account worth £11,162, whereas he has 8 accounts worth in total £563,274. She owns a car worth £12,000, whereas he has 7 vehicles and a boat worth in total £69,800. The wife has a PECRS pension worth £16,535 which the husband cannot match, but in all other respects, he appears to have wealth on his side. Indeed, his rental income and income from his old age pension exceeds the income received by the wife by some £42,161 annually. Having said this and drawn attention to the differences in capital and income, it does not immediately strike one that the case is complex or unusual.
7. If the wife can reasonably provide for her fees, there is no reason for her not to take on that expenditure herself. Even if she might find that difficult, it would not, even then, be fair to make the husband contribute if it meant that he could be unfairly prejudiced.
8. Can she reasonably provide for the fees herself? It is suggested that the wife can make savings and that she can apply for legal aid. I agree that this is a possibility and indeed she may decide to make cutbacks during the period this court case lasts.
9. In cases where a party is clearly eligible for legal aid, it might appear unjust to force a husband to fund an expense which a wife could cover by making an application under the legal aid scheme. This is not such a case because the wife is not, on the face of the matter, clearly entitled to any legal aid funding. She owns her own property and would appear to fall outside the category of people who would benefit most from the scheme. She is, of course, entitled to apply, but, if she succeeded in her case, she could have to repay fees calculated at the legal aid rate, at the end of the case.
10. I venture to say that it would not be impossible for the wife to fund her own legal case. She would, however, find it harder than the husband to continue to pay her lawyer on a private basis. Fees of some £26,000 have already been incurred, of which £14,270 have been billed and £5,000 remain unpaid. This is a daunting prospect for her, having to rely on a small salary as a teaching assistant and debts as set out in 3(d) above. The situation is sufficiently "unusual" to bring it within the parameter of S-v-C, but only because of the difference in buying power between the parties. If the Court were to refuse her application, there is sufficient risk that she would not achieve "equality of arms". There is a considerable difference in wealth.
11. There are other cases decided in the UK which do not rely on a case being "complex" or "unusual". In particular I would like to cite a passage from a judgement of Munby J in Re G (Maintenance Pending Suit) [2006] EWHC 1834, in which he quotes a passage from Nicholas Mostyn QC in TL-v-ML [2006]1 FLR 1263 and which reads:-
"From these cases I derive the following principles:-
(i) The sole criterion to be applied in determining the application is "reasonableness, which to my mind is synonymous with "fairness".
(ii) A very important factor in determining fairness is the marital standard of living. This is not to say that the exercise is merely to replicate that standard.
(iii) In every maintenance pending suit application there should be a specific maintenance pending suit budget which excludes capital or long term expenditure more aptly to be considered on a final hearing. That budget should be examined critically in every case to exclude forensic exaggeration.
(iv) Where the affidavit in Form E disclosure by the payer is obviously deficient, the court should not hesitate to make robust assumptions about his ability to pay. The Court is not confined to the mere say-so of the payer as to the extent of his income or resources. In such a situation the court should err in favour of the payee.
(v) Where the paying party has historically been supported through the bounty of an outsider, and where the payer is asserting that the bounty has been curtailed but where the position of the outsider is ambiguous or unclear, then the court is justified in assuming that the third party will continue to supply the bounty, at least until final trial."
Not all the circumstances of this case match the situation here. In particular, there is no risk that the wife's case could fall at the first hurdle leaving the husband immediately out of pocket in respect of her legal fees. However, I do take account of the idea that "reasonableness" is an important consideration, as is the "standard of living" of the parties. Why should the husband be entitled to the lawyer of his choice if the wife is not?
12. If the husband is made to fund the wife's fees, will he really, in the long run, be prejudiced in the event that he wins the case on preliminary issues, thus unjustly losing his contribution to her fees? The case on preliminary issues is likely to be heard by the Inferior Number in 2-3 months time, say, by the end of May. This will mean that the husband will be obliged to pay to the wife £6,000 under the order, or, if the case is not heard until June, £8,000. If not till July, £10,000. It will be open to the Court in making a final order to take into account the legal fees paid by the husband. It is true that he will have to make an interim contribution. However, on considering the overall fairness of a final order, the payment of legal fees will constitute an ingredient of that settlement. I don't see that a payment in advance of legal fees is unfair, so my answer to the question is "no, he will not be unfairly prejudiced".
13. The maximum which the husband is at risk of losing up to the hearing of the case on preliminary issues will be £10,000, or about 15% of his income for 2010. Even if he does make this contribution, his income will still exceed the wife's by some by about £25,000 - £30,000.
14. In all the circumstances of the case, it is fair to order that the husband should fund the wife's legal fees to the extent of £2,000 per month until further ordered, either by the Inferior Number (when given judgement on preliminary issues), or by the Registrar, when making a final order. This case does fall within the parameters of S-v-C as being sufficiently unusual, but I prefer the English authority, which makes it clear that the overall considerations of reasonableness and relative standards of living can be applied to applications for interim maintenance or maintenance pending suit.
Authorities
S-v-C [2003] JLR N 24.
Re G (Maintenance Pending Suit) [2006] EWHC 1834.
TL-v-ML [2006]1 FLR 1263.