What leads a court to order a husband and his companies to pay £1.5 million towards his wife’s legal costs in financial proceedings in divorce?
In a case this month* a husband, Mr M, was ordered to personally pay a little over £1 million towards his wife’s legal fees. The companies in the case, which were described by the judge as “a fantastic charade with the husband a shady puppet master in the background”, were also ordered jointly with the husband to pay just under £500,000 towards the wife’s costs.
Why?
The judgement in M v M outlines the applicable law (see paragraphs 10 and 11). The court may make any order in relation to costs as it thinks ‘just’. The general rule in financial remedy proceedings though is that the court will not make an order requiring one party to pay the costs of another party. However, the exception to this general rule is if there is an issue of “conduct”, or to quote the rules:
“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)”
The court must look at these factors when making a costs order:
(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.
So, to turn to Mr M, how did he conduct himself during the litigation?
On his financial disclosure form, which he completed as part of the court process, he declared liabilities of just under £500,000.
His actual worth was found and proven by the wife’s legal team to be £100 million.
Rather than conceding this point, the husband altered the way his assets were held and moved them to Belize, beyond the Wife’s reach. The judge found that he had done this “in a deliberate and elaborate attempt to defeat the claims of the Wife”.
Mr M failed to give full and frank disclosure, or engage in the proceedings, or respect the authority of the court. He committed contempt of court on repeated occasions, forged his wife’s signature on more than one occasion and started litigating other issues to increase pressure and cost for the wife.
The judge stated that “time and again, he has either taken a stance in the proceedings or issued proceedings which were obviously and inevitably going to fail and do nothing other than cause distress to the wife and increase the costs.”
This is litigation conduct at its “most extreme”.
* M v M [2013] EWHC 3372 (Fam)
