P v P (Treatment of costs in sharing cases)

Reserved Written Judgment of Deputy District Judge David Hodson

Introduction

This discrete judgement solely concerns several issues of legal costs in a wholly sharing case. It does not concern costs in the needs scenario.

As I explain further below, it is not the comprehensive judgement in the two-day final financial remedy case which judgement was given orally on the afternoon of the 2 ^nd day, 20 October 2022 with the draft order approved by me on 14 November. As I said in that oral judgement, it was a case which should never have got to Form A, let alone a final hearing, yet total costs in excess of £150,000 had been incurred when the asset base gross of legal costs was less than £1 million and notwithstanding that the respondent was in person from sometime before the FDR. The respondent did not himself raise issues regarding costs but I felt that I had a judicial duty to do so, and I refer to this element more below. A good part of the time in closing submissions with the barrister for the applicant was on the question of the various treatments of costs. Having given oral judgement, with the invariable modicum of time to prepare and with no ability to do a comprehensive analysis of the case law, he asked for a written judgement on this aspect and I agreed. Nothing in this judgement detracts from the oral judgement and is solely limited to that costs aspect. Permission to appeal on this aspect was extended until handing down. I refer to some background aspects for context

There 3 costs aspects namely

a. How should costs owing by either party to their lawyers at the final hearing in the sharing exercise be treated if they are materially different in any way

b. How should the costs incurred by either party and already taken, advanced, from marital assets being shared equally be treated in the sharing exercise if they are materially different

c. How should costs orders between the parties be treated in a wholly sharing case?

Of course, I am bound by precedent. Nevertheless as we examined the authorities, it didn't seem to me these issues were clearly set out or at least in these particular circumstances which I suggest are not unusual for solicitors, barristers, arbitrators and mediators daily resolving cases around the country.

The summary elements of the case itself

This was a long marriage, 1978 until separation March 2019, 40 years. The former wife is 69 and the former husband 70. In other words, this marriage was their adult lifetime. They each have still a very modest income as well as modest pensions in payment and quite rightly it was agreed this was a clean break case. They have 2 children, aged 42 and 40, both independent of course. Apart from the question of family gold and wedding jewellery, in the distinctive culture of families with connections with India, all of the assets were entirely marital. Net of legal costs already paid, total existing assets were somewhere between £800,000 and £900,000. It was acknowledged and agreed that apart from a couple of aspects this was an entirely sharing case and moreover on an equal basis. Anyone therefore reading this judgement with a knowledge of where our case law has gone since the Supreme Court, as it now is, in White in the year 2000 will know the obvious and immediate answer. All of the assets will be divided equally, in a way hopefully agreed between the parties alternatively ordered by a court, and that is the simple end of it. Their needs are met and in this sort of case it's hard to see how needs can be too different. Having been practising in family law since the days of my training contract in the 2 ^nd part of the 1970s, it is a position in law far simpler and clearer than previously. Very many cases settle quite rightly without going anywhere close to a court office on this basis. And so it should have done here.

The respondent husband had acted in person for a time before the FDR and subsequently. His prerogative. But equally as I said in my oral judgement, this does not give a party impunity, carte blanche, to run arguments which have minimal or no prospect of success without a direct cost. What were they? In summary and only as background

In about 2009, the former wife's father had died. Yet the estate was still being disputed between siblings, with extensive litigation in India. Apparently the Will itself is still being disputed. One of the siblings has died and their spouse has taken possession of a property. And so on. Sadly those of us practising in the English family courts with some experience of cases involving litigation in India are keenly aware that sometimes it can take a very long time with many procedural elements without any reliable apparent final end date and then sometimes disputed enforceability. This is the position here apparently. More than a decade after the death, there is no end in sight. But even when or if any inheritance is received, it might be no more than about £35,000, very small in the totality of this case. Clearly nonmarital. Clearly not yet received. Clearly some significant doubt about whether it would be received. Clearly if received it would be well after the date of separation and now the date of the final outcome. In these circumstances, and especially based on clear case law, this would not be shared or brought into account in the sharing exercise. It should not have delayed a settlement under any circumstances. The respondent former husband had been thoroughly wrong to have pursued this in countless questionnaires and correspondence

Secondly, gold and family wedding jewellery. This was held by the former wife until the wedding of their daughter in 2016 when she gave the bulk away to her as a wedding gift. The former husband asserted he had not been aware this was happening. The former wife said he was. Following oral evidence, I was satisfied the former husband did not know until the start of this dispute albeit that was sometime ago. He should have been told. I found the wife had misled him, at best, in her replies in this regard. Nevertheless I was satisfied that what had been given to the daughter came wholly or mostly from gifts to the former wife either before her own wedding, at the wedding itself or subsequently and came from her family, particularly her own mother, with the intention of being passed on down the generations, as has happened. I'm satisfied that apart from a few items of insignificant value on the information available to me, there was nothing left. It had all gone to the daughter and apparently will go to her own daughter and so on down the generations. This was either nonmarital or reasonable gifts by the former wife during the marriage which it would be inappropriate to bring into account. I understand the former husband feels genuinely aggrieved and unhappy. This should be directed to the failure by his now former wife to tell him at the time. I don't know what was the state of the marriage at the time of the wedding of their daughter; he said it wasn't good. This might be the explanation. Too often family lawyers find that various events, including perhaps wrong and inappropriate action and conduct by one spouse during the marriage, can reverberate loudly in the context of any subsequent family proceedings. It can then be difficult to extricate the unhappiness by a spouse of what wrongly or inappropriately occurred within the marriage with the fairness of the financial outcome looked at objectively. I believe this is what happened here. The former husband was rightly aggrieved and genuinely didn't know about the gift and disposal until the family dispute started. But that was not a reason for the matter to take so long through court. Moreover with good advice I would have expected he would have been told this. So I had little choice but to dismiss this element of the case. It was no good reason to alter the equal sharing

And those were the 2 issues. And they had brought about £150,000 of costs out of a pot, gross of those costs, of perhaps a little less than £1 million. In a case of equal sharing. A tragic situation. But for the family courts and for family lawyers an easy case, if I may say respectfully, where the principles of law are very clear — and that is rarely said!

The conclusion, apart from the question of costs, was that there would be a totting up and an amount would be paid by the former husband to the former wife on the basis that he retained certain assets. The finalisation of marital partnership accounts in the traditional fashion.

But this still left the unhappy and uncertain position of costs in 3 categories

Costs amounts

Let me set out the respective positions and amounts.

The former husband had lawyers from the beginning, which was a fairly substantial voluntary disclosure exercise, continuing after Form A until a couple of months before the FDR. I don't know the firm and as far as I can tell, the charging rate was quite modest. At the end of the trial, he owed them £7905 and he had paid earlier in the proceedings £16,500 from marital resources. In other words, a total of about £24,500 costs. Itself quite high.

The former wife had instructed well regarded central London lawyers. At the end of the trial, she owed them £28,407.54 but had costs already paid from marital resources of £100,549.29. In other words, only £1000 short of £130,000. Moreover this was notwithstanding that, from a date in mid spring after the February FDR and until late August 2022 preparation for final hearing, they came off the record when there was little work to be done in order rightly to save unnecessary costs. This was a large level of...