M v M (Financial Provision: Party Incurring Excessive Costs)
| Jurisdiction | England & Wales |
| Judgment Date | 1995 |
| Date | 1995 |
| Year | 1995 |
| Court | Family Division |
THORPE, J
Financial provision – husband obsessed with litigation – costs disproportionately high – effect on exercise of judicial discretion.
The parties married in 1976. They had two daughters born in 1984 and 1989. The husband was an experienced builder and successful entrepreneur in the residential property market. They built a house which was conveyed into their joint names and later a further house also in joint names which they greatly improved. Both made financial contributions. In 1986 the husband inherited some £370,000. The parties sold the second house and bought a third house for £675,000, partly financed by the husband's company in which he held 99 per cent of the shares. By complicated arrangements the first house was agreed to be sold to the company, but the sale had not been completed by the time the marriage broke down. Nor had a company pension scheme been completed which had been intended to secure a retirement income for the husband and the wife. In 1991 the wife petitioned for divorce in a county court. In January 1992 decree nisi was pronounced and the wife filed an application for ancillary relief for herself and the two children. In August 1992 she and the children moved into the first house which was the smaller of the two houses then owned by the parties. Over the next two years the husband made numerous applications to the court, which were usually either adjourned or dismissed with costs, and included pointless and expensive proceedings in the Chancery Division. The court ordered the sale of the third house and in May 1994 granted the wife's application for that sale to be enforced. Eventually the ancillary relief proceedings, together with an application by the husband for a specific issue order that the future education of the children should be committed to the State system so as to avoid any further school bills, were transferred to the Family Division.
Held – (1) The husband had dissipated his capital on litigation. At the time of the hearing there remained a cash fund of some £780,000 which was mainly the proceeds of the sale of the third house. In applying the criteria set out in s 25 of the Matrimonial Causes Act 1973 the court had to have particular regard to the welfare of the children. The husband was capable of substantial earnings, though he also had considerable debts. His application for a direction to commit the child to State education was inappropriate having regard to the circumstances of this family. This was a case where there should be a clean break between the husband and wife under s 25A of the 1973 Act. In achieving a clean break account had to be given to the wife's needs for a capital sum to rehouse herself and the children and to secure her expenditure during the years ahead when her first priority would remain the two children. Further, conduct was relevant having regard to the manner in which the husband had misconducted the proceedings. Such misconduct was generally reflected in orders for costs rather than directly in the scale of the awarded sum. However,
this was a quite exceptional case where the husband's strategy had been so gross and so extreme that it would be inequitable to disregard it. Consequently, it was appropriate to look to the quantification of the wife's share not on what remained but on what would have remained had that policy of waste and destruction not been pursued. In those circumstances there would be an order that the husband pay the wife the sum of £450,000 and orders that the husband make periodical payments to the two children at a nominal rate.
(2) So far as costs were concerned, both parties were now legally aided and the Law Society charge would operate in full against both parties. In the circumstances of this case the wife should have her costs. It would, therefore, be ordered that, subject to one small exception, the wife's costs should be enforced against the husband's share of the remaining capital.
Statutory provisions referred to:Matrimonial Causes Act 1973, ss 25 and 25A.
Kerstin Boyd for the wife.
Carol Atkinson for the husband.
MR JUSTICE THORPE.This is essentially a wife's application for ancillary relief for herself and the two daughters of the family. There is a Children Act application issued by the father which is directed to be heard at the same time, but all the evidence and all the effort has been devoted to the trial of the ancillary relief application. The case well illustrates the importance of court control of ancillary relief applications. The husband, as I shall call him, has conducted this litigation without any seeming sense of proportion and with ordinary rationality overridden by intense emotions that have driven him to dissipate very substantial sums in pursuit of unrealistic or illusory goals. The detail will show that prior to issue of his legal aid certificate he spent roughly £170,000 of realisable capital on the ancillary relief case. Over the course of the last 9 or 10 months when he has been legally aided he has incurred estimated costs of an additional £70,000, and on top of all that he has incurred costs of approximately £37,000 with a specialist firm of solicitors who deal with pension schemes. The wife's case has been conducted by one firm of solicitors throughout under a legal aid certificate and her costs are estimated at about £110,000.
The husband, as so often happens in these cases where the litigant is obsessed with the litigation, has had within these family proceedings six different firms of solicitors in all and at least seven different counsel. Of course, even firm court control cannot inhibit the obsessional litigant from issuing hopeless applications or pursuing hopeless appeals. But I have no doubt at all that had this case been conducted in the Principal Registry by two of the relatively small band of specialist London solicitors instructed by the husband and the wife respectively it could have been brought to this stage for only a tithe of the money that has been spent on it. For essentially it is neither complex nor difficult.
In order to illustrate these points I will turn to the agreed chronology which has been helpfully prepared by Miss Boyd for the wife. The husband is 48. He is an experienced builder. He is an experienced dealer, entrepreneur and negotiator in the residential property market. The wife is 42. They met in 1975 when the wife was a tenant in an investment property owned by the husband. She was at that time employed by British Airways as a stewardess. The marriage was celebrated on 24
July 1976 and in about 1977 the couple embarked on the construction of a home ("the first house") which was conveyed into joint names, appropriately since each had made financial contribution. The parties lived at the house after its construction. In 1982 the wife left British Airways and obtained a job with another company which she retained until approximately the date of conception of the first child. In the autumn of 1983 the couple bought a second house, again in joint names and again each made financial contribution. It was cheaply bought, perhaps because it required a good deal of renovation. The works took about six months and towards their close the first child, a girl, was born. She is now nearly 11. The couple moved into the second house shortly after her birth. In September 1986 an aunt of the husband's died in Scotland. He inherited her estate which was worth about £370,000. In August 1987 the couple sold the second house for £410,000 and purchased in its stead a substantial house, the third house, for £675,000. Obviously the husband's inheritance and the extent of the profit made on the second house enabled them to reach up to such a substantial and expensive family home.
The financing of the third house was complex and included a loan from the husband's company. The husband at all material times traded through a company bearing his name and being no more than a corporate alter ego. Of the hundred issued shares he owns 99, the remaining share being registered in the name of his elderly and infirm mother. A pension scheme had been set up within the company to provide retirement income for the husband and the wife. When the loan to finance the purchase of the third house could not be repaid from future profit a complicated arrangement was devised whereby the parties agreed to sell the first house to the company and the pension fund lent the company a substantial sum of £116,000 in order to enable the company to purchase the first house. Over the interim since it ceased to be a family home, it had been let as an investment property. However, although this scheme was set up it was never fully implemented and the conveyance of the first house to the company had not been executed by the husband and wife at the time of the marital breakdown. That occurred in 1989, which is also the year of the birth of the younger child, a girl, who is now 5½. The petition for dissolution was not filed until June 1991. At that stage both parties were living, albeit unhappily, at the third house. For some reason which has not been explained to me the petition was issued in the Luton county court. The obvious court of issue would have been the Principal Registry for a Kensington couple living in a valuable Kensington home. In some degree I have no doubt that the fortuitous issue of the essential proceedings in the Luton county court has amplified costs and allowed the proceedings to proliferate to an extent that might have been prevented or avoided in the Principal Registry.
A decree nisi was pronounced in January 1992 and a few days later on 29...
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