Case No. BV19D14014

42.This is where I believe there is greater uncertainty and where we took most time in closing submissions and I was grateful for the authorities given to me.43.The point and potential unfairness can be simply put. In a sharing case, where one party has taken significantly more out of the marital pot for their own legal costs than the other party, is it fair to divide up the pot net of those costs already withdrawn predominantly by one party or is it fair only to do the division once those costs have been notionally brought back in? In this case, the former wife had taken almost precisely £84,000 from the marital pot more than the former husband. If that was added back in, he would have an additional £42,000. Is that fair?44.In working through this, I believe there might have been a confusion in thinking with reference to the default of no order as to costs and what that means or is intended to mean in practice in a sharing case. This was the change made in 2003 and rightly so. It is of course borrowed from the English civil litigation arena. But in those circumstances, each of the litigants are completely separate. In family law they are often working from a combined marital financial pot alternatively a marital pot and each of them having some of their own resources. I don’t think there has necessarily been enough consideration to how no order as to costs actually works in the context where one or both parties may have taken their own unilateral steps regarding their own legal funding. It seemed to me this case was one of the most obvious and stark circumstances. One party had taken about £100,000 out of the marital resources and paid to their lawyer for their own legal fees which had already been incurred at the date of trial. The other party had only taken a modest amount, £16,500. He had also incidentally complained that the marital bank accounts had been emptied without his knowledge, thereby putting him at real financial difficulties in paying his own debts. This is the lawlessness, if I use this strong word, when this sort of unilateral action happens during a case.45.Sadly, family lawyers see this sort of activity too often. The plundering, admittedly also a loaded word, by one party of available resources at the time of separation and subsequently to pay their own lawyer. And why not? If one party, perhaps the applicant and financially weaker spouse, feels they will be at a real disadvantage, without opportunity of legal funding to have equal or necessary representation, and if it will all be divided up anyway, why not take it? An advance. On account. Solicitors are always put in a very difficult professional position when asked by clients if they should do so. They are asked often. It happens quite often. When the other spouse discovers, there is usually an explosion of correspondence and ill feeling and seriously puts back prospects of ADR settlement.46.English family law, unlike many continental, civil law European jurisdictions, does not have any significant sense in which the marital partnership ends at the date of separation, with sometimes few backward glances at what was the financial position at the date of separation. The assets are as at the date of the settlement, the FDR or final hearing.47.Accordingly, the terrain is ripe for this sort of unilateral behaviour. English law almost seems to give tacit encouragement to parties to the invasion of marital savings in the relatively confident knowledge that it may well be all glossed over, lost in the wash, by the time of the final settlement or hearing. That cannot be right. It is accepting, through silence, unilateral conduct, perhaps sometimes by the party more willing to contemplate this sort of action. If the FDR or final hearing court doesn’t give it much attention, the aggrieved party definitely does because they feel the other party has gained a distinctive advantage by their conduct in respect of the marital finances from separation until settlement48.Moreover where the rates of litigation loans are high, 18% or more, it makes perfect sense to take from existing resources. Despite campaigning for the measure over several decades, the family court still does not have the power to order the sale of assets at an interim stage to provide for urgent needs particularly levelling up funding for lawyers. There are relatively few instances of legal services orders. In my assessment there should be far more expectation between lawyers of agreement at an early stage about realisation of assets for the proper funding of each party. In this case for example, it might have been very wise for the property in which the husband has a 50% interest to be sold and the proceeds used equally for legal fees. That did not happen. Instead the wife took £100,000 from marital resources for her fees49.Indeed, the former husband would have been in huge difficulties if he had wanted the same level of representation, which I happen to think would have been beneficial and have resulted in a settlement without a final hearing, because there was no money left for him in the marital pot, apart from real property. So these sorts of actions taken unilaterally by one spouse are to the direct detriment of the other party in a number of these cases. They give a very bad, adverse feel to the way the case is conducted. It gives very unfair advantage to the spouse who has taken this action if the other spouse does not have corresponding liquid resources50.But searching through the case law it is very hard to find this issue being addressed including in a way that I believe many lay people would consider fair namely the money each has incurred, taken as a way of advance, for their own legal fees being brought back in. Is it in the category of add back, as I was told by the former wife’s barrister in closing submissions, in which case the threshold is very high? Is it within the discretionary exercise? Is it simply money that has gone and cannot be divided up as part of sharing as it is no longer available in the pot? I felt distinctly uncomfortable with these propositions which is why we spent a lot of time and why I addressed in my oral judgement and was asked to address more fully in this written judgement and I now do by reference to the quoted authorities. These are the cases referred to me. There may be others51.The first was GW v RW 2003 2 FLR 108, and by Nicholas Mostyn sitting then as a deputy High Court judge. It is in the immediate aftermath of the introduction of the no order as to costs rules in the 2003 reforms but also had to look back to the Leadbitter regime. He said, clause 85, in terms that in the then recent pre-White era, the wife’s claim was for an amount to meet her reasonable requirements. This was similar to civil litigation and costs would follow the event. However this was more difficult post White where the function was to determine shares in a pool of assets which was the fruit of the marital partnership. He said, clause 92, a safer starting point in a big-money case where assets exceed needs, and I comment this case has sufficient money to meet needs and therefore just comes into this category, was no order as to costs. That starting point should be departed where unreasonableness by one or other party was shown. If the starting point was no order as to costs, then Leadbetter should be reconsidered, clause 99. Costs paid should not be added back and costs outstanding should be included as a debt in the schedule of assets. I believe the across-the-board application of no order as to costs risks ignoring, perhaps even encouraging, certain conduct to the advantage of one spouse and which is then irrelevant when no order as to costs is strictly applied. Indeed, the judge was very alert to this, clause 98, saying nothing in his judgement should be taken as giving any encouragement to a party to misbehave in the litigation safe in the knowledge of the starting point of no order as to costs. He goes on to refer in that clause to certain conduct but does not deal with the specific conduct, actions, in this particular case. In my perception the problem arises when the unilateral action in drawing down from marital resources can’t really be characterised as litigation misconduct or otherwise giving rise to a costs order. It doesn’t come within his clause 98 description. This is why I think there could be a departure from what is said in that judgement52.He goes on, clause 93, to say that no order as to costs may reduce the extent of satellite costs assessment litigation which can be protracted and acrimonious and prolong the agony between the parties. Where that is a risk, I fully agree with him of course.53.As above, in clause 99 he deals head-on with Leadbetter. He says that the logic cannot be gainsaid namely not to add back costs already paid and not to deduct costs outstanding effectively pre-empts the court’s decision as to costs. I don’t think it does in the sort of scenario in this case before me, the sharing of the marital assets. I think bringing back what has already been paid out simply leaves the marital pot intact for any costs order then to be made if appropriate.54.He goes on to say it is artificial as the costs paid are gone, paid out already. But there are many instances where, such as in the add back situation, there is a figure on the balance sheet which actually isn’t there but is appropriate to be included as an item. One might include the inference cases. So costs having gone is not in itself a reason in my assessment.55.This judgement was naturally one of the strongest elements on which the former wife argued her case against any form of bringing back in what had been taken by her as a quasi advance from the marital funds56.I was next referred to R v R (Financial Remedies: Needs and Practicalities) (2011) EWHC 3093, a decision of Coleridge J. The facts are totally different. Short marriage. Needs assessment after looking at the marital pot availability. I was taken to clause 32. The husband had argued that the wife’s costs were excessive and this should be reflected by adding back a portion of her bill. There had been a lot of argument on this issue which had generated costs in itself. The judge acknowledged, as I did above, that the applicant will probably have more costs because they have to make the running in the case. He went on to say as follows, clause 32.As a matter of principle, I’m driven to say that I would discourage the pursuit of this add back principle or approach so far as it relates to costs. It inevitably leads to a quasi-taxation or assessment of costs during the hearing but without the court having all the material which would be available to, for existence, a cost judge. It also rather flies in the face of the no order starting point and leads to debates about costs by the back door which the new rules were designed to try and reduce or prevent.57.Some of this is difficult to comprehend for a first instance Judge in 2022. A cost judge? It is a very long time since I remember a formal assessment of costs which used to be known as taxation of costs. It may well happen including in very substantial cases. But far more often and very frequently, there is a summary assessment. That is the purpose of the rather complicated form completed by solicitors and filed at the court in advance. I think that in most final hearings, especially at District Judge level, an experienced financial remedy judge will often, certainly not always, have sufficient information to take a view. Summary assessment occurs as part of the final hearing. The material is available. But I do not see this judgement explaining why this process, a very simple mathematical calculation of bringing back onto the marital partnership balance sheet, flies in the face of the no order principle. To the contrary, my concern is that if no order as to costs is taken to mean in anyway that each party always meets their own, then it is highly arbitrary as to when that date occurs. If each party meeting their own costs happens to be the arbitrary date of the final hearing, then it may well be there could be unfairness to the party who had paid money out of their own resources on the day before the hearing to their lawyers to put into funds as distinct from the party who went into the hearing owing their lawyer quite a lot of money for the final hearing. Because this situation does present itself from time to time. No order as to costs in that situation is often grossly unfair dependent upon the way the assets are divided up. The parties feel this keenly in my experience as a solicitor. So on this case, I do not believe an bringing back flies in the face of the no order principle and leads to back door debates about costs.58.GS v L (Financial Remedies: Pre-Acquired Assets: Needs) (2011) EWHC 1759 was transparently about premarital assets and needs, and therefore totally different to this case. The wife felt that the husband, as a consequence of what she thought was his misguided approach to the litigation, ran up unnecessary costs which she wanted to reclaim either by a costs order or an add back, para 9. This is traditional territory of costs orders. I am making a costs order in this particular case. I don’t need to follow any add back approach to do so. Part of the problem in that distinctive case was the costs owing were to Spanish lawyers. The judge accepted that to add back costs paid to the Spanish lawyers would require the test of wanton, the now accepted case law test for a traditional add back of past expenditure. The judge refers to these add back cases, clauses 88-90. But she goes on, 91, to look at the dissipation against the backdrop of the overspending party. She referred to the decision above of Coleridge J. But she was looking at more than just expenditure on English family lawyers in respect of the family proceedings. The figure for the overspend was clearly an uncertain calculation, clause 87.3. I do not think the exercise in that case can be comparable to the precise, to the penny, exercise in this particular case. Under no circumstances am I disputing the case law authority on the test for the traditional add back based on expenditure inappropriately undertaken. But I do not think that is the scenario or criteria which presents itself in this particular case.59.MF v SF (Financial Remedy: Financial Conduct) (2015) EWHC 1273 of Moylan J concerned a starting point of equal division of wealth created during the marriage. The court found the wife should have accepted the husband’s open offer. The court found it would not be fair to ignore the consequences of that conduct when exercising discretion and accordingly an adjustment was made; one of the cases to which I alluded above where this approach is understandably adopted. Moreover the wife’s costs were grossly disproportionate and that disparity reflected the unjustified and disproportionate approach taken by the wife and the court found a figure of the disproportionate disparity. It made a costs order in favour of the husband.60.So, standing back, reversing the genders in the case before me, there is no difference in respect of the making of a costs order based on the conduct of one spouse including refusing an open offer. I have dealt with that by a costs order. Just as the court did in the reported case. What doesn’t seem to have been directly addressed is the point in this case about the very different taking from marital assets and how this should work in the sharing outcome. Certainly, if it was said that the former wife in the case before me had engaged in litigation misconduct thereby leading to her costs being so high there might be a crossover and similarity. I have indicated my concerns about the level of those costs but they do not come close to being in the category of litigation misconduct; disproportionality, excessive spending or similar.61.The judge, now of course the senior financial remedies judge in the Court of Appeal, deals with the test of dissipation with a wanton element. But I don’t find any here. I’m not adding back under the traditional add back for wanton dissipation. I’m doing so to make sure I have a fair and appropriate amount in the marital pot for equal sharing. That is not the traditional category of add back in my opinion. So I do not seek in any way to go against the remarks of the judge in this case. They simply do not relate to the circumstances of the case before me and similar cases62.TT v CDS (2020) EWCA 1215 includes Moylan J now in the Court of Appeal. Both parties alleged litigation misconduct under s25(g) MCA. It draws out that it would be reflected if appropriate in a quantified costs order but otherwise can be determined as taken into account in deciding the award; my analysis above in relation to the making of the costs order against the former husband in the case before me.63.It then looks at the interrelationship between litigation misconduct and needs, a very difficult and sensitive area for a judge but one which I did not have to consider in my case because I did not find any litigation misconduct. The £800,000 spent in that reported decision should instead have been a modest fraction if not for the litigation conduct of one spouse. The problem facing me in coming to a decision on this matter was that the very substantial withdrawal from marital funds couldn’t be characterised as litigation misconduct; at least as far as present professional understanding is of such behaviour. Certainly unilateral, perhaps taking advantage by quick action, perhaps very tactical. But not necessarily litigation misconduct. This is why I believe the various cases are not addressing the distinctive feature in the case before me. The simple withdrawal, perhaps with notice given immediately thereafter, from marital funds for legitimate legal expenses albeit at a dramatically different level from the other spouse and therefore having a consequence on the sharing outcome. I cannot nor should I attempt to bring that into the categorisation of litigation misconduct.64.So again I find myself not seeking in any way to demur from the remarks of the Court of Appeal in that reported decision. They just do not address the central issue before me of the costs of the case. Those were the cases given to me65.It’s right however that I should deal with another case, not referred to me but which is important in the recent development of financial remedy law in my opinion namely E v L (2021) EWFC 60. On its facts, it is different; a short marriage in a case concerning the entertainment industry with premarital assets and business assets. However the judge, Mostyn J at clauses 71-73, dealt with the point in time when the clock stopped for the purposes of calculating the acquest. In opening in words which many would want to echo, he said that there are already in this field too many uncertainties and subjective variables. The law needs to be transparent, accessible, readily comprehensible and should propound simple and straightforward principles. In my experience convention and tradition dictate that save in cases where there has been undue delay between the separation and the placing of the matter for trial before the court, the end date for the purposes of calculation of the acquest should be the date of trial. This rule of thumb should apply forcefully to assets in place at the point of separation which have shifted in value between then and trial.66.He concluded as follows: (para 76):The endpoint should be the present time, the time of trial. There is in my judgment no good reason to depart from the traditional and conventional terminus. Although the parties' relationship came to an end in December 2019 there has been no unjustified delay by the wife in bringing her claim before the court. In that period the greater part of her share of the acquest has been traded with by the husband and put on risk.67.I do not see that valuable judgement, looking at the really difficult situation too often presenting itself at first instance hearings in moderate or long periods of separation of different valuations and shifting movement of assets between separation and final settlement/hearing, as saying that monies quasi-advanced from what will be eventually shared should not be brought into account when, as he says, the endpoint is reached namely at the point of settlement what are the assets of the marital pot for equal distribution