Neutral Citation Number: [2015] ewhc 2507 (Fam)


Conclusion on the primary factual issue



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Conclusion on the primary factual issue


  1. At [32] and [33] of the judgment I gave in March last year, [2015] EWHC 455 (Fam) I summarised what, at that interlocutory stage, was the burden of W's case thus:

"It is in the light of this very unsatisfactory history that W invites me at this stage to take the most jaundiced view possible of H's and the Trust's and possibly also EFG's presentation. She invites me to conclude that what has been produced and presented is a stage-managed and crafted but fictional drama which has the underlying and collusive sub-text that H will when the dust settles return to a position where he has access, direct or indirect, to trust assets and to their value to meet his income and capital needs. She points to the hint in the 3 December meeting notes which suggest that when the time is ripe H may be taken on as an employee of the Trust or one of its businesses and paid a salary. She may have been surprised at the suggestion in those notes that were the children to be educated in England the embargo on their benefits from the Trust might be lifted so that funds could flow in their direction free from the ravages of at least French taxation. She might wonder what scope there may be, at a convenient time, for resettling this Trust in another which might more easily be able to meet H's needs. And she might remember that this "New" Trust itself replaced an earlier one to meet contingencies not yet fully made clear, but which prevailed at about the time of H's divorce and financial separation from his first wife.

At the final hearing it may be asserted that the gloom and doom now attending H are mere theatrical devices which some time after the curtain on these proceedings comes down will be confirmed as the improbable constructs which (W maintains) they are. But at this stage I must proceed with caution, bearing in mind that the evidence in the case is not yet complete and in particular that I have heard no oral evidence specifically directed to many of the issues now raised. It remains not beyond the realms of probability to imagine that the contrary case might be made out, that RFG has throughout acted as a trustee should in balanced protection of its potential beneficiaries' interests."


  1. The evidence is now complete and so is my conviction that W's suspicions and her case against H and TB/RFG and the Trust are made out. Their position is an elaborate charade, the stage management of which has been conducted ruthlessly and without regard to cost. I do not need to speculate how TB plans to re-establish the access H enjoyed to capital and income which previously was his albeit via elaborate financial arrangements designed no doubt initially for fiscal purposes to distance him from their source. I do not need to consider whether the exclusion deed could or could not be upset, nor whether the undisclosed opinions taken from leading Chancery counsel on the topic by H are soundly based if, consistent with H's case, he could not even have made the trust deed available for their consideration. I am confident that when the time is ripe and there is the will to get H out of this impasse where seemingly he is stuck in what on any realistic view would be inextricable penury, TB will find a way.

  1. I am of course conscious of the fact that very considerable professional effort on both sides was put into the preparation and presentation of documents and the collation of authorities representing the fruits of significant research into a number of topics with which, in this judgment, I have not dealt. That is because it has been unnecessary, in my view, to traverse the factual and legal issues to which they gave rise given what I regard as a clear route through to an informed estimation by me of the probable development of the future relationship between H, TB/RFG and NHT.
  1. There may be other routes, but it does not follow that I must follow them. My conclusion is clear, that H will far more likely than not via car-related employment with an NHT entity once again within the foreseeable future be in a position to support a very affluent lifestyle. That conclusion does not depend on nor would it be affected by the outcome of any attempt on my part to evaluate, for instance, what might be the prospects of any attempt in the BVI court to undermine the validity of the exclusion deed. Nor indeed need I, even if safely I felt that I should or could, try to form a view on the question whether Bannister J in his BVI Court might have reached a different conclusion in November 2013 if he had had the benefit of the submissions as to English trust law made to me, far less as to whether he might have approved the deed in the form in which it was so shortly thereafter executed.


  1. I should explain, on that last topic, that disquisitions on that and other trust-related topics were included amongst 20 or so of the early pages of the closing submissions for H which were made available about noon on the day preceding final oral submissions in this case, for which H's matrimonial counsel paid tribute to the input of a silk and junior counsel drawn from the specialist Chancery bar. In bypassing their contribution for the reasons I have described I of course make no findings at all about whether any contrary view of the law might have been expressed if the time available had allowed Mr Bates and those assisting him to give detailed consideration to their propositions. It may well be that there would have been no contest, I do not know, but I do know that the propositions they state do not affect my conclusions about the underlying realities of H's case.

Conclusion

  1. The determination with which NHT assets have been protected and the vigour with which TB has made clear that none will be either coerced or encouraged to go in W's direction are undeniable. Were I in a position to make orders directly against NHT or its assets (which on the findings I have made I do not believe, as a matter of law, I could) it is clear W would face an uphill and most likely doomed and interminably Sisyphean struggle to collect. Were I to make a lump sum order against H I can be sure that would not encourage TB and RFG to make the necessary funds available to him with which to meet that obligation.
  1. So (as I canvassed I might during the course of the evidence and with Mr Pointer as he made his closing submissions) I shall adjourn W's claims for a lump sum and for any adjustment of property order (save that I will dismiss her claims to vary NHT on the basis it is a nuptial trust, and for the transfer to her of cars from the Car Portfolio which I have found are not his).


  1. I am mindful of cases where it has been said that capital claims should not be left indeterminately unresolved, but there are hard cases (a category within which this case certainly falls) where fairness and justice must prevail over the normal desirability of finality in litigation. I refer as examples to Hardy v Hardy [1981] 2 FLR 321 and MT v MT (Financial Provision: Lump Sum) [1992] 1 FLR 362. In my judgment it is certainly foreseeable that an accommodation will be made to give H access to part of the millions held within NHT.

  1. I am not deterred by the consideration that for the moment H maintains that he has neither an income nor access to funds for living other than by borrowing from friends and relatives who in due course he must repay. Although he has been reticent in the extreme in divulging what considerations prevent him from commencing employment while residing primarily in France, I conclude that they are fiscal. Paying some tax and having an income would appear to most people to be preferable to having no income upon which to pay tax.
  1. It is a matter ultimately of choice for H, but clearly he has the faculty to make substantial earnings. He spoke of earning £120,000 a year at the point, until the beginning of 2010, when he embarked upon his sabbatical. TB clearly values him highly as a potential employee of Anthology. The Car Portfolio appears to have fared prodigiously well under his tutelage. The commercial worth to that business of his knowledge, his contacts, his experience and his enthusiasm must in my judgment be at least £200,000 a year at this stage, plus the prospect of whatever bonus arrangement is arrived at. I take his earning capacity at that figure as its minimum. [In the light of the application made by Mr Pointer at the June hearing for permission to appeal against the order for periodical payments, referred to below, it occurs to me that this last sentence lacks precision. H's earning capacity in Anthology's employ, the faculty upon which I have based that order, includes what I anticipate will be substantial bonuses: as to which, historically, see [99] above.]


  1. The evaluation of W's entitlement to continuing provision by way of periodical payments has to be approximate and broadbrush for a number of reasons. Her case has not been presented on a needs basis. Where she will live appears uncertain (although H made it clear that, again for fiscal reasons, he would rather she did so outside France). She envisaged continuing to rent, and in current circumstances will have no alternative but to do so. Her attempts to establish a budget are now out of date. So the best I can do without anything much by way of evidence to go on is to fix on a figure which it would be very reasonable for W to have available to meet her living costs, and those of the children while in her care. The order will be for H to pay W maintenance pending suit until decree absolute and thereafter periodical payments at the annual rate of £120,000 per annum, payable monthly in advance during joint lives until she remarries or further order. H should continue to have credit for actual payments made in respect of her rent, if that is the system which still operates.

  1. I wish to make it plain that this order is not intended to carry with it any element of capital adjustment: it is based entirely on maintenance provision and it is for that purpose that I make it.

  1. The order will be backdated to 1 November 2014, and as before will be on the basis that W gives credit against it for such sum as she in fact receives each month pursuant to the French child maintenance order. I will formally adjourn the applications W makes for English orders for their benefit.
  1. The order which I made for £14,700 per month pending suit maintenance (including £2200 in respect of her rent, and subject to credit being given for child maintenance paid by H under the French order) on 12 June 2013 was scarcely complied with by H, and was suspended by me on 15 April 2014. H's application to vary it remains unresolved, and meanwhile could not be enforced either in law or in practice. There is no immediate prospect of it being paid and I shall have to hear submissions on the question whether the pragmatic solution may not be to start with a relatively clean sheet and a fresh order.


  1. It follows that W will be in a position to restore her surviving applications for capital provision. Either party could also apply (when and if sufficient capital resources become available to H) to capitalise W's future maintenance pursuant to section 31(7A) of the 1973 Act. Such an application should however, if made, not be constrained by the approach to such applications advocated in the case of Pearce v Pearce[2003] EWCA Civ 1054, [2003] 2 FLR 1144 where the Court Appeal (at [37] and [38], in the words of the FLR headnote) stated that on applications for variation and capitalisation there three questions had to be decided: (i) what variation, if any, to make in the order for periodical payments; (ii) the date from which any variation should take effect; and (iii) when to substitute a capital payment, calculated in accordance with the Duxbury tables, for the income stream being terminated, albeit with a narrow discretion to depart from those tables to reflect special factors generated by the individual case. In this case, however, such an application should leave it open for the tribunal hearing it to make whatever lump sum award it might appear appropriate to impose in exchange for a clean break, without limiting the exercise by reference to the periodical payments order which might be in force, either then or after appropriate variation. In short, in the particular circumstances of this case the quantum of a lump sum should upon any 31(7A) application be at large.
  1. I anticipate that I will be invited to deal with costs applications in due course. It will perhaps surprise no one that I do not regard this as a case where the "no order" principle should prevail. W has failed in a number of the specific applications she has made, but in light of my findings it is perhaps to be anticipated that in the overall balance it is H who may face a substantive costs order. I would like at this stage simply to observe that impecuniosity is no shield against the making of an order. Furthermore, if I determine not to assess costs summarily (as is my inclination) the power does exist to make an order for the payment of a reasonable sum on account of costs, and upon which interest at the current judgment debt rate of 8% can run.


Later: Decisions concerning the form of the order

  1. 17 June transpired to be the earliest date available for a hearing to finalise the terms of the order to be made in light of my determinations, and also to deal with issues as to costs. At the conclusion next day of that hearing I repeated what I had made plain at the end of the previous hearing, that none of the time requirements in relation to any appellate applications were to start to run pending the finalisation of this judgment for it include my decisions on the outstanding issues.

  1. The form of the order was largely settled in the course of submissions which took up most of the first morning of the June hearing, and which are reflected in the order which I shall direct to be drawn in the light of this composite judgment. Two matters in particular, other than costs, require explanation and decision.

  1. The first relates to the basis and terms upon which I shall adjourn W's capital claims. I was referred to the decision of Charles J in FG v MBW (Financial Remedy for Child) [2011] EWHC 1729 (Fam), an application where for reasons explained in his judgment it would be necessary to see how the father's economy developed before revisiting orders made for the interim and concluding the claim for a housing fund, notwithstanding the fact that, as put at [159] "There are naturally powerful arguments in favour of avoiding any adjournment or review and enriching finality. This is because litigation is costly in both financial and emotional terms and hostility exists between the parties."
  1. At [166] Charles J took account of the risk that the father might take steps to deal with assets or income in ways of which the mother would be unaware and which might be to her disadvantage unless he imposed a regime to ensure that the mother and the court would be properly informed of relevant events. I have already given reasons why a similar outcome precludes a final determination of W's outstanding claims at this stage, and I intend similarly to impose a supervisory regime in an attempt to achieve some balance of fairness between the parties. I have drafted provisions of the order to cover this aspect which I hope will prove workable, without imposing too onerous a reporting obligation on H. I do so on what I hope will prove to be understood as a requirement that unless only for reasonable clarification this is not intended to encourage W to embark upon any further full-scale investigation, unless of course that is directed by the court in the light of the available information.


  1. The Piper aircraft similarly provoked full debate, and in particular as to the appropriateness if at all of what is designed, in the event of its sale, to prevent W from having a fair opportunity as against other contenders (primarily, of course, NHT) to have determined the merits of any claim she might make to receive or to participate in the distribution of the proceeds. No one at that June hearing dissented from the proposition that the court would have power to regulate dealings with the aircraft and with its proceeds in the context of a costs order against H, if made, which remained unsatisfied in whole or in part. I will explain below the basis upon which I do indeed propose to make such an order, and indeed to supplement it with an order for payment on account to give rise to an immediate liability which, in all the circumstances of this case, I do indeed think it appropriate to protect by means of such restraints. Although in the course of the hearing I indicated that this was an issue which we might discuss on another day if I did indeed make such a costs order, I think that the reality is that it was accepted on behalf of H that I have that power. I am extremely reluctant to envisage the need for a further hearing. If the situation arises where competing interests fall for determination, then of course it is possible that some priority demand or some consideration of fairness may require that the funds in question should go to some third party or indeed to H, rather than to W: but the intermediate restraint appears to me to be not only reasonable but fully justified in the circumstances of this case. I have drafted the paragraph of the order which deals with this, and which includes provision for anyone affected to make application to the court.

Costs: quantum
  1. The Form H put in by Beckmans on behalf of H immediately prior to the June hearing showed £869,000 odd as the grand total of his estimated costs in relation to financial issues. But in fact that does not include the costs he incurred and has presumably paid when instructing his previous solicitors. So it would not be unreasonable to suppose that his costs of the financial proceedings come to about £1 million, of which £690,600 has been paid (£650,000 of which it will be recalled from payments made direct to Beckmans in discharge of their charge over the Bentley), leaving £178,500 still outstanding. Mr Pointer made it clear that H seeks no order for costs against W. He invites me to make no order for costs across the board, to include no order in relation to occasions when costs were reserved.


  1. W by contrast has put a figure of £588,500 on the costs she has incurred in the financial proceedings with both Withers and Sears Tooth together of which all but £70,000 retained by Withers remains unpaid. It seems to be established that that £70,000 derives from H and formed part of the total of £353,000 which, over a period, he paid pursuant to A v A
     costs orders made in relation to the contested jurisdiction proceedings which concluded so ignominiously in April 2013 with an order that he pay the entirety of W's costs in relation to that dispute on an indemnity basis. The total costs on both sides of the jurisdiction dispute were estimated at approximately £600,000. The parties have therefore spent upwards of £2 million on costs in this jurisdiction, and unknown but no doubt significant amounts in France and in Switzerland.

  1. Mr Bates on behalf of W has proposed a break down of the individual costs of the various strands of the financial dispute and of the various hearings. For reasons which will appear, I do not find it necessary to go into the detail of what can only be a "best effort" at achieving anything close to accuracy. But, in overall terms, he concludes and submits that in relation to elements of the dispute for which W's costs come to £170,680 the order made was "no order as to costs", behind which neither party can now seek to go. The amount of costs susceptible to orders I might now make on this basis totals £417,829: what has been described as W's "costs at large".
  1. W's aspiration is accordingly to have H condemned in her costs of each of the occasions which gave rise to costs at large; for me to conclude that that assessment should be on an indemnity rather than a standard basis; and for me then to fix on the figure (he suggests 70% of the costs at large) which I should order H to pay on account within a short period, on which judgment debt interest should run from the date of the costs award.


The appropriate costs regimes

  1. Mr Pointer and Mr Bates were agreed as to which costs regime applied to each constituent part of the financial case as it has developed.

(i) ancillary relief costs strictly so-called, in relation to applications for financial remedies comprising also the First Appointment and subsequent directions hearings, two FDRs before Mostyn J, the PTR and indeed the main final [sic] and subsequent hearings: here the "no order principle" for proceedings within FPR 28 such as these is the general rule;

(ii) interim injunctions, including applications for freezing orders and applications under MCA section 37 to avoid dispositions, which are subject to a modified version of CPR Part 44 (as well as other CPR provisions not currently germane), where there is no presumption either that there be no order or that costs should follow the event so that the court's starting point is "a clean sheet";

(a) maintenance pending suit and the application for A v A costs allowances (at the time of the orders in this case, forming part of the maintenance pending suit evaluation) which are not subject to the "no order principle"; except that:

(b) that statement of principle is complicated by the fact that in relation to the first such hearing, on 1 May 2013, I ordered that the costs should be "in the financial remedy application";



(iii) on 15 April 2015 I made no order, as between H and W, in relation to the costs of W's unsuccessful application to set aside H's charge of the Bentley to Beckmans as security for their costs.
  1. It will I hope be immediately apparent how complex an analysis (and indeed a detailed assessment) would be required were I to attempt to apply scrupulously these different regimes to the several components of this multi-strand and thoroughly entwined litigation. Fortunately it seems to me that there is a way through this thicket. For a number of considerations obviously apply whatever the court's point of departure is, and whether the judge is confronted with a clean sheet, or the presumption that there should be no order, or simply a discretion to be exercised judicially.


  1. Moreover I ventured for consideration during the course of the hearing, and received no adverse response, the suggestion that it would be impracticable (and though I did not then articulate the thought, productive more of expense than clarity) to attempt an application-by-application or issue-by-issue analysis and assessment of the costs of this hydra-headed litigation. And so I have considered carefully all the propositions advanced to me during a full day of submissions on costs issues and propose, having weighed them, to stand back and address the global perspective with a broad brush.

  1. The "no order principle" seeks to apply as the default outcome a situation where neither party should expect to recover costs from the other, in the hope no doubt that as a result they will be cautious about what each of them respectively ventures (or one might even say wagers) upon the uncertain event of the outcome of litigation in this sphere. Whether or not they incur that expenditure from their own separate sources the money ultimately comes from family resources, in the ordinary case, which may well fall for division. Thus, it is hoped, profligate expense will be less frequent. It has to be said that a number of cases in recent years indicate that this objective is often flagrantly not achieved, and this is indeed such a case. A peculiarity here however is that on the face of it a large proportion of the monies spent is said not to be available to either party: if one took his case at face value H's solicitors might well conclude there was little prospect of him being able to pay them that £178,500 which on their figures he already owes them, without even taking into account the prospective costs of the appeal against these orders which he has expressed the wish to pursue.
  1. But even the "no order principle" is not inflexible: one would hardly suppose that it could be. The factors which a court should take into account when considering whether nevertheless to make a costs order are set out in the following excerpt from FPR 28.3:


(5) Subject to paragraph (6), the general rule in financial remedy proceeding is that the court will not make an order requiring one party to pay the costs of another party.

(6) The court may make an order requiring one party to pay the costs of another party at any stage of the proceedings where it considers it appropriate to do so because of the conduct of a party in relation to the proceedings (whether before or during them).

(7) In deciding what order (if any) to make under paragraph (6), the court must have regard to -

(a) any failure by a party to comply with these rules, any order of the court or any practice direction which the court considers relevant;

(b) any open offer to settle made by a party;

(c) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(d) the manner in which a party has pursued or responded to the application or a particular allegation or issue;

(e) any other aspect of a party's conduct in relation to proceedings which the court considers relevant; and

(f) the financial effect on the parties of any costs order.


  1. PD 28A para 4.4 adds to rule 28.3 that in considering the conduct of the parties for the purposes of rule 28.3(6) and (7) (including any open offers to settle), the court will have regard to the obligation of the parties to help the court to further the overriding objective (see rules 1.1 and 1.3) and will take into account the nature, importance and complexity of the issues in the case.

  1. In the "clean sheet" situations referred to above, the following key parts of CPR rule 44.2 apply:

(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including—

(a) the conduct of all the parties;

(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and

(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.

(5) The conduct of the parties includes—

(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;

(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and

(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.


  1. It is not easy to reconcile, in relation to two cases to which equally the "clean sheet" regime applied, comments of Ward LJ in Baker v Rowe [2009] EWCA Civ 1162[2010] 1 FLR 761 at [35], on the one hand, with observations of Mostyn J which were approved by Ryder LJ in the Court of Appeal case of Solomon v Solomon [2013] EWCA Civ 1095 at [22]. In parallel situations, so far as the costs regime is concerned, Ward LJ observed:

"… costs do not follow the event. The judge making the costs order has, therefore, a wide discretion. He could not properly ignore the fact that one side had won and the other had lost but that is not determinative nor even his starting point. It is simply a fact to weigh but in the circumstances of this case it is a fact of overwhelming weight."

whereas in the view of Ryder LJ:

"The judge correctly stated the general rule did not relate to the interim applications he had decided. Costs were then in the discretion of the court, and the principles set out in CPR Part 44 applied. The starting point for what are described as 'clean sheet' cases is that costs follow the event. To find that principle one need look no further than Gojkovic v Gojkovich (No 2) [1991] 2 FLR 233 (CA) where Butler-Sloss LJ (as she then was) said:

'there still remains the necessity for some starting-point. That starting-point, in my judgment, is that costs prime facie follow the event … but may be displaced much more easily than, and in circumstances which would not apply, in other Divisions of the High Court.' "


  1. But that is perhaps by the by: not least because I did not spot when referred to Solomon by Mr Pointer that Ryder LJ's judgment was given on the occasion of an unsuccessful application for permission to appeal, and thus falls into one of the categories referred to in paragraph 6.2 of the Practice Direction (Citation of Authorities) [2001] 1 WLR 1001 which "may not in future be cited before any court unless it clearly indicates that it purports to establish a new principle or to extend the present law. In respect of judgments delivered after the date of this Direction, that indication must take the form of an express statement to that effect." But, that notwithstanding, the juxtaposition of the two statements is perhaps an indication of how difficult it is clearly to formulate the differentiated guiding principles through whose hoops judges and practitioners must strive to jump.


  1. I would though emphasise that the scope of the consideration to be given to questions of conduct is not confined to, but is expressed to include, the factors set out in rule 44.2(5), and thus would surely not exclude "any other aspect of a party's conduct in relation to proceedings which the court considers relevant" for the purposes of FPR rule 28.3(7)(e) in a "no order principle" situation.

  1. Finally, in relation to maintenance pending suit orders (and those other types of potential applications not covered by FPR 28.3, which are subject to the CPR regime in unamended form, relevant considerations include as a factor that costs normally should follow the event.

  1. Further, in relation to that Practice Direction, I will digress to draw attention to the provisions of its paragraph 8, in my experience universally disregarded, and so no particular criticism is intended of the advocates in this case who did no more than follow that universal disregard. Solomon was an additional transcript produced during the hearing to augment the 16 in relation to costs already in the agreed bundle. That paragraph reads:

8.1 Advocates will in future be required to state, in respect of each authority that they wish to cite, the proposition of law that the authority demonstrates, and the parts of the judgment that support that proposition. If it is sought to cite more than one authority in support of a given proposition, advocates must state the reason for taking that course.

8.2 The demonstration referred to in paragraph 8.1 will be required to be contained in any skeleton argument and in any appellant's or respondent's notice in respect of each authority referred to in that skeleton or notice.

8.3 Any bundle or list of authorities prepared for the use of any court must in future bear a certification by the advocate responsible for arguing the case that the requirements of this paragraph have been complied with in respect of each authority included.

8.4 The statements referred to in paragraph 8.1 should not materially add to the length of submissions or of skeleton arguments, but should be sufficient to demonstrate, in the context of the advocate's argument, the relevance of the authority or authorities to that argument and that the citation is necessary for a proper presentation of that argument.


  1. The requirements of that Practice Direction have of course since been buttressed by the additional requirement in paragraph 14 of the Revised Efficiency Statement issued on 1 July 2015 (after this hearing) that any bundle of authorities which has been agreed between the advocates should not contain more than "an absolute maximum of 10 authorities", in addition to which (I quote it simply for completeness) paragraph 15 requires that "where it is necessary to refer to an authority, a skeleton argument must first state the proposition of law the authority demonstrates; and then identify the parts of the authority that support the proposition, but without extensive quotation from it."




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