Jersey Unreported Judgments

Matrimonial - applications by the Respondent for costs in respect of legal fees and for an interim lump sum and an application by the Petitioner to vary maintenance.

[2018]JRC093

Royal Court

(Family)

22 May 2018

Before     :		J. A. Clyde-Smith, Esq., Commissioner, and Jurats Blampied and Sparrow
Between	S		Petitioner
And	T		Respondent

Advocate C. R. G. Davies for the Petitioner.

Advocate B. J. Corbett for the Respondent.

judgment

the COMMISSIONER:

1.        The Court sat on 25^th April, 2018, to determine three interim applications, namely (1) an application by the respondent for a costs allowance from the petitioner of £200,000 in respect of his legal fees up to and including the end of the final hearing; (2) an application by the respondent that the petitioner should transfer to him £1,650,000 by way of an interim lump sum with a view to his purchasing a property to live in, and (3) an application by the petitioner for the spousal maintenance paid by her to the respondent to be varied downwards.

Background

2.        The parties married on in 1995 and separated 21 years later in 2016.  The respondent is 56 years old and the petitioner 58 years old and there is one child of the marriage, who is now 21.

3.        The respondent moved out of the former matrimonial home in Jersey in May 2016 and moved to England, where he lives in rented accommodation.  The petitioner commenced divorce proceedings in June 2016, and a decree nisi was granted in April 2017. 

4.        The family wealth derives in major part from a business the petitioner had developed which was sold in December 2014, netting her £22.8 million, partly payable in shares in two tranches, the second tranche vesting in December 2016.

5.        A consequence of the sale was the loss of the petitioner's employment status and her ability therefore to live in the former matrimonial home in Jersey, which now stands empty and is being marketed for sale. The petitioner resides partly in Guernsey and partly in France.

6.        The bulk of the petitioner's wealth has been loaned into a trust created by her during the course of these proceedings, and within the trust structure are numerous properties, including X.

7.        The petitioner's draft schedule of assets and liabilities estimates her net wealth at just over £20 million.  As a draft it is subject to revision.  The respondent, in his schedule of assets and liabilities, estimates the petitioner's wealth at over £24 million, and his own assets, in contrast, at £779,000, comprising in the main his interest in a number of pension funds.

8.        The respondent had latterly been employed in the petitioner's business, but following the separation, he has qualified as a lawyer and is now employed as a trainee within X Law Firm. He estimates that he will be earning £1570 net of tax per month.

9.        On 5^th December, 2016, following a contested hearing, the Registrar ordered the petitioner to pay the respondent interim spousal maintenance of £3,575 per month, which, by consent, was increased on 7^th July, 2017, to £5,725 per month, to take into account rental being paid by the respondent.  On the same date, and again by consent, the petitioner paid the respondent £45,000 towards the respondent's legal fees incurred up to the end of an anticipated Financial Dispute Resolution ("FDR"), such sum to be taken into account in the respondent's final settlement. FDR has not yet taken place.

10.      On 15^th August, 2017, the respondent's application for ancillary relief was referred up to the Royal Court.  For the reasons set out in the Commissioner's unpublished judgment of the 22^nd March 2018, whilst the petitioner had made serious allegations of domestic violence on the part of the respondent, she was not going to rely upon them for the purpose of the ancillary relief application.

11.      Following the giving of further directions by this Court, including orders for financial disclosure and the commissioning by the petitioner of a report by BDO on her trust structure, the final hearing of ancillary matters was due to take place in the seven days commencing 23^rd April, 2018.  However in March 2018, the petitioner changed her position, and indicated that she did intend to rely on her allegations of domestic violence, because her medical condition had deteriorated, exacerbated she alleged by the domestic violence.  At a hearing on 22^nd March, 2018, and in the light of the evidence of her medical condition, the final hearing date was vacated.  There will now be a fact finding hearing in relation to the allegations of domestic violence, scheduled for the three days commencing 10^th October, 2018, followed by a final hearing for the eight days commencing 19th November 2018.

12.      We now take the three interim applications in turn.

Legal fees

13.      The respondent's financial position is that he has bank savings of some £53,000, out of which he will shortly have to pay £25,000 to Advocate Corbett's firm for fees incurred up to and including this hearing.  In addition to that, he has three small shareholdings worth £2,348.58p, two ISAs worth £8,815.76p, a pension valued at £239,657.61p, a share of the "T Retirement Scheme", a scheme he valued at £336,336, and a "Vantage" pension, his interest being valued at £15,036.  He has some personal items, two cars and a number of motorcycles.  The respondent lists the petitioner as having a collection of some nineteen cars/vehicles; something she does not accept.

14.      Advocate Corbett produced a schedule of legal costs from and including the hearing of the interim applications on 25^th April, 2018, up to the end of the final hearing (but excluding any FDR), totalling £221,867.50, covering the time of herself, Advocate Nicholas Le Quesne who has the day to day conduct of the file, and English Queen's Counsel. 

15.      Advocate Davies was critical of this schedule because of duplication, she said, between the work of Advocate Corbett and Advocate Le Quesne, and the use of a QC; her client would be using Junior Counsel.  According to the schedule the cost of the QC for the final hearing alone was estimated at £72,000.

16.      Advocate Davies compared this estimate of the respondent's costs with the fixed fee arrangement she had with the petitioner for £73,000, which excluded any FDR, the cost of Junior Counsel and disbursements.

17.      Advocate Davies submitted that the respondent had no need for assistance on legal fees, because in addition to the monies held in his bank accounts:-

(i)        He could withdraw £5,000 from his Vantage pension.

(ii)       The petitioner would consent to his withdrawing 20% of the fund under the T Retirement Scheme, of which the petitioner was a trustee and under which both had an interest; the petitioner valuing the fund at £699,130.

(iii)      There is a frozen joint account with Coutts in the sum of £33,490 which the petitioner would agree to release with the proceeds being distributed equally between them, which would bring him some £16,500.

(iv)      He could sell his small shareholdings and cash in his ISAs.

18.      Advocate Davies said the respondent was well able to meet his own reasonable legal costs.  She pointed out that out of the spousal maintenance paid by the petitioner to the respondent to date, only some £10,000 of it has been spent by the respondent on his living expenses; the rest had been used to pay his legal fees, which to date amounted to some £155,000.  She calculated that the petitioner had indirectly contributed £92,000 in this way to the respondent's legal fees, in addition to the sum of £45,000 the petitioner had already contributed by consent.

19.      It is now well established that a costs allowance can be included in an award for spousal maintenance (see S v C [2003] JLR Note 24).  The courts in Jersey have looked for guidance on the principles to be applied to the judgment of Wilson LJ in the English Court of Appeal decision of Currey v Currey [2006] EWCA Civ 1338:-

"20     In my view the initial, overarching enquiry is into whether the applicant for a costs allowance can demonstrate that she cannot reasonably procure legal advice and representation by any other means.  Thus, to the extent that she has assets, the applicant has to demonstrate that they cannot reasonably be deployed, whether directly or as the means of raising a loan, in funding legal services.  Furthermore, not to forget the third of Thorpe L.J.'s three features, she has also to demonstrate that she cannot reasonably procure legal services by the offer of a charge upon ultimate capital recovery.  I would add, fourthly, that the court needs also to be satisfied that there is no such public funding available to the applicant as would furnish her with legal advice and representation at a level of expertise apt to the proceedings, i.e. that the application does indeed in that regard fall within the unserved constituency referred to by Thorpe L.J. in the statement quoted at [1] above."

20.      The respondent has filed an affidavit dated 5^th April, 2018, explaining the attempts he has made to raise litigation finance and we accept that he cannot raise a loan in anything like the amounts necessary or obtain litigation funding. There is no public funding available. Nor do we think it reasonable that he should have to raid his pension funds or liquidate the few shares and ISAs that he has.

21.      We reject the criticism that he has, in fact, been funding his legal costs in part to date through spousal maintenance.  That maintenance was set at what the Registrar found was a reasonable level, in the context of this family and the marital standard of living, and it is entirely up to the respondent how he uses that income.  If he decides to live frugally, and use the money saved towards his legal fees, that is his prerogative.  We come to the level of his spousal maintenance shortly.

22.      We bear in mind the "overriding objective" contained in Rule 47 of the Matrimonial Causes Rules 2005 to deal with cases justly, which includes under Rule 47(2)(a) putting the parties on an equal footing.  There are two hearings to prepare for, namely the three day fact finding hearing in October 2018 and the eight day final hearing in November 2018.  From what we understand of the respective means of the parties, it cannot be said that they are on an equal footing.  The petitioner's financial affairs are complex, indeed sufficiently complex to require a report from BDO in order to understand them, and we accept that inevitably the greater burden will be upon the respondent in the ancillary relief applications which he is making, rather than upon the petitioner who is defending them.  It is reasonable that in making the running in this case, the respondent must have confidence that he can fund consistent legal representation for the duration of those hearings.

23.      Advocate Corbett also raised the need for a gender-discrimination cross-check to be performed in the present case, so that the Court could be sure that if the parties' respective genders were reversed, the Court's decision on the respondent's present application would be the same as if it had been made by a wife in reversed circumstances.  Those circumstances would be a wife coming out of a 21 year marriage, living in rented accommodation and with limited liquid assets, seeking financial provision from a husband with wealth potentially of £20 million, most of which had been deployed into a trust structure.  That cross-check served to reinforce our conclusion that a costs allowance should be ordered in favour of the respondent. 

24.      As to the amount of the allowance, that was a difficult issue for the Court, as assessing future costs is inevitably a somewhat speculative exercise.  We did have reservations over the quantum of the costs schedule put forward by Advocate Corbett, the risk of duplication as between her and Advocate Le Quesne (we were not entirely clear as to why there should be two advocates working on the same matter) and the use of a QC as opposed to Junior Counsel.

25.      We took into account that the respondent was about to pay £25,000 to Advocate Corbett's firm, so that the costs schedule could be reduced by that amount . After discussion, we concluded that we should order the petitioner to pay to the respondent's legal advisers, to be held and accounted for by them, a costs allowance of £100,000, on the basis that if further legal funding is required by the respondent, it can be applied for at the appropriate time, at which point the Court would require a detailed breakdown of how the sum of £100,000 had been spent.  The sum of £100,000, and any further sums ordered, would be taken into account in the respondent's final settlement.

26.      We considered staging the payment of the allowance, but the two hearings are taking place in close proximity and in our view preparation for both will have to take place in advance of the first hearing.

Interim Lump Sum Payment

27.      This application was prompted by the adjournment of the proceedings and the sense of injustice perceived by the respondent at his life, using his words, being on hold until the end of the year, living in temporary rented accommodation.  He said this at paragraph 47 of his affidavit of 5^th April 2018:-

"47.     As the Court is already aware, the Petitioner has the use of a large manor house in France, two properties in Guernsey, albeit one which is going to be renovated....  There is also our son, ........,'s cottage in Normandy and the farm occupied by the Petitioner's [X] manager and his family.  In addition, she is drawing income from ..., our former Hampshire marital home, which was transferred to .... Limited in January 2018 at her insistence and for which I have received no consideration for my share.  The Petitioner also receives income from another UK property."

28.      Whatever the merits of the respondent's application and leaving aside the issue of whether there is sufficient liquidity within the trust structure created by the petitioner to meet such a lump sum order, we are not persuaded by Advocate Corbett that we have the power to order an interim lump sum in this way.  Article 29 of the Matrimonial Causes (Jersey) Law 1949 ("the Matrimonial Causes Law"), in so far as it is relevant, is in these terms:-

"29     Financial provision for party to a marriage in cases of divorce etc.

(1)       Where a decree of divorce, nullity of marriage or judicial separation has been made, the court may, having regard to all the circumstances of the case including the conduct of the parties to the marriage insofar as it may be inequitable to disregard it and to their actual and potential financial circumstances, order -

(a)   .....

(b)   that one party to the marriage shall pay to the other party to the marriage such lump sum or sums as the court may think reasonable whether or not any sum is ordered to be paid under sub-paragraph (a);

(c)   ....

(d)   ....

(2)       Without prejudice to the generality of paragraph (1)(b), an order under this Article that one party to the marriage shall pay a lump sum to the other party to the marriage -

(a)   may be made for the purpose of enabling that other party to meet any liabilities or expenses reasonably incurred by him or her in maintaining himself or herself or any child of the family before the making of an application for an order under this Article;

(b)   may provide for the payment of that sum by instalments of such amount as may be specified in the order."

29.      In her skeleton argument, Advocate Corbett said that England had turned its face against interim lump sums, referring the Court to the case of WS v HS [2018] EWFC 11.  Jersey, she said, remained more flexible and ahead of the English approach.  She relied on Article 29(2) set out above and the decision of Registrar Obbard in H v H [2008] JRC 097A, which she said demonstrated that the power to order an interim lump sum was alive and well and in use.

30.      WS v HS transpires not to be on point as it concerned the issue of when and in what circumstances the English Court could order the sale of a former matrimonial home by way of interim relief.

31.      In H v H, the Registrar made an interim lump sum order of £10,000 under Article 29(2) in favour of a wife, who did not need ongoing spousal maintenance, to meet her debts and "provide a modest sum to set her on her feet, such as accommodation, arrangement of business cover and food".  These are all items he said covered by article 29(2).  However, the Registrar declined to accede to the wife's application for an interim lump sum "on account of a final lump sum to be awarded", because he said that must await an application under Article 29(1).  As he said at paragraph 14 "its provisions are limited to the immediate and urgent provisions of funds to a party, not a part payment of the final award."  In our view H v H does not assist Advocate Corbett.

32.      At the hearing, Advocate Corbett moved away from Article 29(2) and relied instead on the words of Article 29(1)(b) "such lump sum or sums", which she said as a matter of straightforward construction allowed interim lump sum orders.

33.      Advocate Davies submitted, we think correctly, that the answer lies in the opening words of Article 29(1), namely that before the Court can order a lump sum under Article 29(1)(b), it has to have "regard to all the circumstances of the case, including the conduct of the parties to the marriage insofar as it may be inequitable to disregard it and to their actual and potential financial circumstances".

34.      Through case law, the courts in Jersey have long held that the criteria set out in section 25 of the Matrimonial Causes Act 1975 can be taken into account for the purpose of this exercise (see, for example, O v O [2005] JLR 535), but the point made by Advocate Davies was that the Court was not yet in a position to have regard to all of these circumstances, not least because physical and financial misconduct were at issue, and the Court was not yet in a position to determine the parties' actual and eventual financial circumstances - the petitioner's schedule of assets and liabilities was still in draft.  A lump sum or sums can only be ordered under Article 29(1)(b) when all of these circumstances have been taken into account.

35.      Advocate Davies produced a copy of section 23(1)(c) and 3(a) of the Matrimonial Causes Act 1975 which are in these terms:-

"23     Financial provision orders in connection with divorce proceedings, etc.

(1)       On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may make any one or more of the following orders, that is to say -

(a) ...

(b) ...

(c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified;

(d) ...

(e) ...

(f)        ...

(2)       ...

(3)       Without prejudice to the generality of subsection (1)(c) or (f) above -

(a)       an order under this section that a party to a marriage shall pay a lump sum to the other party may be made for the purpose of enabling that other party to meet any liabilities or expenses reasonably incurred by him or her in maintaining himself or herself or any child of the family before making an application for an order under this section in his or her favour."

36.      As can be seen, contrary to Advocate Corbett's submission, these provisions are very close to those of Article 29(1) and (2).  Although section 23(1) does not have the same introductory words requiring the Court to take into account all the circumstances of the case, section 25 provides that in making an order under section 23(1)(c), the English court "shall have regard" to all the criteria therein set out - in other words, the net effect is the same.

37.      Advocate Davies also referred the Court to the Privy Council decision in de Lasala v de Lasala [1979] 2 All ER 1146, on appeal from Hong Kong, construing legislation in Hong Kong relating to financial provisions for parties to a marriage in the same terms as the statutory provisions on the same subject which were in force in England, and thus similar to our provisions.  Lord Diplock, describing lump sum orders as "once for all orders", said this at page 1154:-

"Lest it be thought that they had overlooked it, their Lordships should also mention that some reliance was also placed by the wife on the fact that by the provision in s 4(1) of the 1972 ordinance conferring power to make lump sum orders the expression 'such lump sum or sums' was substituted for the expression 'such lump sum' in the previous ordinance.  The suggestion was that it was a necessary implication from this reference to more than one lump sum that the court, having made an order for the payment of one lump sum, could make a subsequent order for the payment of another lump sum.  In their Lordships' view, the substituted provision permits and permits only a single order which may, where appropriate, include provision for the payment of more than one lump sum as, for instance, where one sum is to be paid immediately and a further sum contingently on the happening of a future event such as the falling in of a reversionary interest in an estate to which one of the parties to the marriage is entitled."

38.      Only a single, once for all, order can be made which can itself provide for more than one payment - hence the reference to "lump sum or sums".  This reinforces the point that with the exception of lump sum payments under Article 29(2), only one lump sum order can be made under Article 29(1)(b), and only then after the Court is in a position to have had regard to all of the circumstances of the case.

39.      In our view, it cannot be said that a lump sum payment of £1.65 million comes within Article 29(2) as meeting a liability or expense of the respondent.  He is in receipt of spousal maintenance, which covers his reasonable needs and the rental payable on the property he is occupying.  For the reasons stated, the Court is not in a position yet to make an order for a lump sum payment under Article 29(1)(b).  Accordingly, and on the basis of the arguments and authorities presented to us, we are not persuaded that we have jurisdiction to make the lump sum order requested.

Review of spousal maintenance

40.      The petitioner seeks a review downwards of the spousal maintenance, pursuant to the provisions of Article 33 of the Matrimonial Causes Law, in essence to reflect the fact that the respondent is now earning £1,570 a month, net of tax or £18,840 per annum.  Advocate Davies suggested that the maintenance should be reduced from the current level of £5,575 per month to £4,000 per month.

41.      Advocate Davies referred to the judgment of the Registrar in this matter dated 5^th December, 2016, when spousal maintenance was first ordered (S-v-T (Matrimonial) [2016] JRC 223B), which gives a useful summary of the principles to be applied in relation to orders for interim spousal maintenance.  Advocate Davies stressed the overriding consideration of the actual needs of the parties pending suit (extracted from Rayden and Jackson 18th edition, at paragraph 16.17 and 16.18), and pointed again to the respondent's use of spousal maintenance to pay his legal fees.  She said, for example, that his bank statements for January and February 2018 showed that he had paid legal fees of £8,073.50 without his savings depleting.

42.      Again, we reiterate the view that how the respondent deals with the appropriate level of spousal maintenance found to be payable to him is a matter for him, but he has filed an updated schedule of income needs which totalled £7,300 per month and which after deduction of his income left him with a shortfall of £5,728.80p per month.

43.      Advocate Davies was sceptical that this schedule arrived at a figure which was close to the current level of spousal maintenance, and went through a "nit-picking" exercise of trying to match his estimate of his expenditure going forward to his past expenditure as shown by his bank statements.

44.      The Court has gone through his schedule of income needs, and can see nothing unreasonable in any of the items he has put forward, but this is an exercise which has to take into account the marital standard of living.  This application for a downward variation of the spousal maintenance is being made by a spouse potentially worth £20 million. 

45.      In her judgment the Registrar quoted from this extract from the judgment of Nicholas Mostyn QC as he then was in TL v ML and Ors (Ancillary Relief: Claim against assets of extended family) [2006]  FLR 1263:-

"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." (our emphasis)

46.      The respondent's position has changed from December 2016 in that he is now working full time, albeit at this early stage in his new career at a modest salary, and he has the travelling and other expenses that go with professional work.  However, in taking into account the marital standard of living and having undertaken another gender-discrimination cross-check, we see nothing reasonable or fair in the suggestion that the spousal maintenance should be reduced.

47.      In conclusion:-

(i)        We order the petitioner to pay to the respondent's legal advisors a costs allowance of £100,000 to be utilised towards his legal costs and disbursements and to be held and accounted for by his legal advisors;

(ii)       We dismiss the respondent's application for an interim lump sum; and

(iii)      We dismiss the petitioner's application for a downward variation of the spousal maintenance payable to the respondent.

Authorities

S v C [2003] JLR Note 24. 

Currey v Currey [2006] EWCA Civ 1338. 

Matrimonial Causes Rules 2005. 

Matrimonial Causes (Jersey) Law 1949. 

WS v HS [2018] EWFC 11. 

H v H [2008] JRC 097A. 

Matrimonial Causes Act 1975. 

O v O [2005] JLR 535. 

de Lasala v de Lasala [1979] 2 All ER 1146. 

S-v-T (Matrimonial) [2016] JRC 223B. 

Rayden and Jackson 18th edition. 

TL v ML and Ors (Ancillary Relief: Claim against assets of extended family) [2006] FLR 1263.